Do Fiscal Rules Constrain Fiscal Policy? A Meta-Regression-Analysis

Abstract

Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. Do Fiscal Rules Constrain Fiscal Policy? A Meta-Regression-Analysis AbstractWe implement a meta-regression-analysis for the budgetary impact of numerical fiscal rules. Based on 30 studies published in the last decade, we offer a consensus estimate with respect to the level of statistical significance, provide suggestive evidence for the effect size, and identify study features of relevance for the measured impact of fiscal rules. Overall, the results document a constraining impact of rules. However, this impact is weakened if refined identification strategies are employed. Moreover, the results provide evidence for a publication bias in which journals are more likely to report constraining and statistically significant effects compared to working papers. We further provide recommendations for future research on the budgetary impact of fiscal rules.

Reconciling Insurance with Market Discipline: A Blueprint for a European Fiscal Union

“…Empirically the available evidence supports the view that fiscal rules contribute to a more sustainable fiscal performance (for a meta-analysis on the constraining impact of fiscal rules see Heinemann, Moessinger and Yeter, 2015). However, the understanding that strict rules could make up for the absence of market discipline is mistaken.…”

The Implications of Book-Tax Differences: A Meta-Analysis

“…The intercept then captures all baseline features at the same time and the reported coefficients have to be interpreted in relation to this baseline (Heinemann et al (2016), p. 10). 50 As explained, we expect that heterogeneity in the estimates of primary studies can be explained by a vector of variables which describe study-specific characteristics (X: moderating factors)…”

“…46 For further meta-regression analysis relying on t-values, see Card et al (2010); Baskaran et al (2014); Klomp and de Haan (2010); Heinemann et al (2016). 47 In order to obtain this value, individual study results are combined to an overall or consensus estimate with respect to the size of effects by assuming between-study homogeneity (see Heinemann et al (2016), p. 9).…”

“…47 In order to obtain this value, individual study results are combined to an overall or consensus estimate with respect to the size of effects by assuming between-study homogeneity (see Heinemann et al (2016), p. 9). 48 Standard errors are clustered at study level.…”

Balanced Budget Rules and Fiscal Outcomes: Evidence from Historical Constitutions

“…These are only a few examples from this abundant literature which we have no ambition to review here. We instead refer to the literature meta-analysis by Heinemann et al (2016) who find that fiscal rules indeed constrain fiscal policies.…”