Do fiscal councils reduce fiscal policy procyclicality?

Chrysanthakopoulos, Christos; Tagkalakis, Athanasios

doi:10.1080/13504851.2022.2130142

Cited by 7 publications

(3 citation statements)

References 17 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Beetsma et al (2019) find that fiscal councils promote adherence to budget-balance and spending rules, owing to their effect on the precision of budget plans. Furthermore, independent fiscal councils have a significant positive impact on the government budget balance (see e.g., Capraru et al, 2022) and mitigate fiscal policy procyclicality (Chrysanthakopoulos and Tagkalakis, 2022). This paper extends the existing literature (see e.g., Wiese et., 2018;Gootjes and de Haan, 2022a) by investigating the role played by specific characteristics of fiscal councils and fiscal rules on the probability of initiating a fiscal adjustment and on the likelihood that this adjustment will be successful on a group of 40 advanced economies from 1990 to 2020.…”

Section: Introductionsupporting

confidence: 63%

See 1 more Smart Citation

The effects of fiscal institutions on fiscal adjustments

Chrysanthakopoulos¹,

Tagkalakis²

2022

Working Paper

View full text Add to dashboard Cite

Using a panel of 40 advanced economies over the period 1990-2020 this paper investigates the effect of various characteristics of fiscal councils and fiscal rules on the probability of starting a fiscal adjustment, as well as on the probability that this fiscal adjustment will be successful. The relevance of fiscal institutions’ characteristics is verified when considering alternative definitions of successful fiscal adjustments. Our results are robust after controlling for endogeneity of fiscal institutions’ characteristics (by the Augmented Inverse Probability Weighted estimator) with fiscal adjustments. We find that a fiscal rule with well specified escape clause, that has multi-year expenditure ceilings and excludes public investment can induce a successful fiscal adjustment. A fiscal council with enhanced remit, independence and accountability and extended tasks and instruments increase the probability of successful fiscal adjustments. Finally, we find that a fiscal council with extended tasks and instruments increase the probability of successful fiscal adjustments based on spending cuts.

show abstract

Section: Introductionsupporting

confidence: 63%

“…Macroeconomic variables are taken from the International Monetary Fund (IMF) and the World bank.2 The original subcategories are taken fromDavoodi et al (2022). See appendix A for the construction of these variables as well asChrysanthakopoulos and Tagkalakis (2022).…”

mentioning

confidence: 99%

The effects of fiscal institutions on fiscal adjustments

Chrysanthakopoulos¹,

Tagkalakis²

2022

Working Paper

View full text Add to dashboard Cite

show abstract

“…It includes the following political variables (which are obtained from Döring's et al, 2022): (a) "Elections", which is a dummy variable taking the value of 1 in election years, (b) "Power", which is a binary variable that takes the value 1 if the political party in power has the most members in the parliament, (c) "Right", which is a binary variable and takes the value 1 if the ideological orientation of the cabinet is right-wing and 0 if it is left-wing. The simultaneous presence of independent fiscal councils and fiscal rules can dampen the procyclical response of fiscal policy (see e.g., Gootjes andde Haan, 2022 andCăpraru et al, 2022). To this end, we incorporate FRit-1 which is a dummy variable capturing the presence of a fiscal rule and is taken from Davoodi et al, (2022).…”

Section: Methodology and Datamentioning

confidence: 99%

Tax policy cyclicality and financial development

Chrysanthakopoulos,

Tagkalakis

2024

Econ Bus Lett

View full text Add to dashboard Cite

This paper adds to the existing literature by examining the macroeconomic, political and institutional determinants of tax policy cyclicality conditional on financial development. We find that an increase in trade and financial openness leads to pro-cyclical VAT and counter-cyclical CIT rate response in high financially developed economies, while an increase in financial openness is associated with counter-cyclical VAT and PIT responses when the levels of financial development are low. A high public debt ratio leads to a counter-cyclical VAT rate response in economies with low financial development. Political power and fiscal institutions are factors that affect the tax policy cyclicality only in less financially developed economies.

show abstract

Fiscal Rules in the European Union: Less Is More

Căpraru,

Pappas,

Sprincean

2024

J of Common Market Studies

View full text Add to dashboard Cite

In this article, we examine the non‐linear relationship between the number of fiscal rules in place and compliance with the European Union's (EU) numerical fiscal targets included in the Stability and Growth Pact (SGP). Using a sample composed of 27 EU Member States for a period spanning 2000 to 2021, we document that countries' compliance with fiscal rules is positively associated with the number of numerical fiscal targets. However, this association only holds up to a specific threshold. Once this threshold is achieved, the relationship becomes negative, implying that the multiplication of numerical fiscal rules may undermine compliance, thereby reducing their effectiveness. In addition, we find that general elections and frequent changes in government reduce compliance, whereas economic adjustment programmes contribute positively to countries' compliance with fiscal targets. The findings bear critical policy implications against the backdrop of the current review of the European fiscal framework.

show abstract

Do fiscal councils reduce fiscal policy procyclicality?

Cited by 7 publications

References 17 publications

The effects of fiscal institutions on fiscal adjustments

The effects of fiscal institutions on fiscal adjustments

Tax policy cyclicality and financial development

Fiscal Rules in the European Union: Less Is More

Contact Info

Product

Resources

About