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On Promoting Fiscal Discipline : The Role of Exchange Rate Regimes, Fiscal Rules and Institutions / Kady Keita.
World Bank Open Knowledge Repository (formerly "World Bank E-Library Publications") Available online
View online- Format:
- Book
- Government document
- Author/Creator:
- Keita, Kady.
- Series:
- Policy research working papers.
- World Bank e-Library.
- Language:
- English
- Subjects (All):
- Business Cycle.
- Business Cycles and Stabilization Policies.
- Cyclicality.
- Economic Policy, Institutions and Governance.
- Exchange Rate Regime.
- Fiscal and Monetary Policy.
- Fiscal Discipline.
- Fiscal Policy.
- Governance.
- Governance and the Financial Sector.
- Institutions.
- Macroeconomics and Economic Growth.
- National Governance.
- Procyclical Policy.
- Public Sector Development.
- Local Subjects:
- Business Cycle.
- Business Cycles and Stabilization Policies.
- Cyclicality.
- Economic Policy, Institutions and Governance.
- Exchange Rate Regime.
- Fiscal and Monetary Policy.
- Fiscal Discipline.
- Fiscal Policy.
- Governance.
- Governance and the Financial Sector.
- Institutions.
- Macroeconomics and Economic Growth.
- National Governance.
- Procyclical Policy.
- Public Sector Development.
- Physical Description:
- 1 online resource (36 pages)
- Other Title:
- On Promoting Fiscal Discipline
- Place of Publication:
- Washington, D.C. : The World Bank, 2019.
- System Details:
- data file
- Summary:
- This paper examines how fiscal rules, exchange rate regimes, and institutional quality affect the cyclical behavior of fiscal policy (how government spending responds to fluctuations in gross domestic product). The analysis is performed on a panel of 153 advanced, emerging, and developing countries over 1993-2015 using local Gaussian-weighted ordinary least squares and two-stage least squares estimators. The findings show that the adoption of fiscal rules alone is not sufficient to promote countercyclical fiscal policy and should be combined with strong institutions. Moreover, fiscal rules seem to limit procyclicality, especially in countries with flexible exchange rate regimes rather than in countries with fixed exchange rates. The analysis also finds that the disciplining effect of fiscal rules depends on the type of rule.
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