Young Kim

Mr.Xavier Debrun

Victor Duarte Lledo

Mr.Roel M. W. J. Beetsma

Xiangming Fang

Samba Mbaye

Xiaoxiao Zhang

Countries increasingly rely on independent fiscal councils to constrain policymakers’ discretion and curb the bias towards excessive deficits and pro-cyclical policies. Since fiscal councils are often recent and heterogeneous across countries, assessing their impact is challenging. Using the latest (2016) vintage of the IMF Fiscal Council Dataset, we focus on two tasks expected to strengthen fiscal performance: the preparation or assessment of forecasts, and the monitoring of compliance with fiscal rules. Tentative econometric evidence suggests that the presence of a fiscal council is associated with more accurate and less optimistic fiscal forecasts, as well as greater compliance with fiscal rules.

Independent Fiscal Councils: Recent Trends and Performance

Ms.Era Dabla-Norris

Luis-Felipe Zanna

Mr.Richard Allen

Irene Yackovlev

Eteri Kvintradze

Sophia Gollwitzer

Mr.Tej Prakash

This paper presents, for the first time, multi-dimensional indices of the quality of budget institutions in low-income countries. The indices allow for benchmarking against the performance of middle-income countries, across regions, and according to different institutional arrangements that deliver good fiscal performance. Using the constructed indices, the paper provides preliminary empirical support for the hypotheses that strong budget institutions help improve fiscal balances and public external debt outcomes; and countries with stronger fiscal institutions have better scope to conduct countercyclical policies.

Budget Institutions and Fiscal Performance in Low-Income Countries

Ms.Catherine A Pattillo

Luc Eyraud

Andrew Hodge

Fiscal rule frameworks have evolved significantly in response to the global financial crisis. Many countries have reformed their fiscal rules or introduced new ones with a view to enhancing the credibility of fiscal policy and providing a medium-term anchor. Enforcement and monitoring mechanisms have also been upgraded. However, these innovations have made the systems of rules more complicated to operate, while compliance has not improved. The SDN takes stock of past experiences, reviews recent reforms, and presents new research on the effectiveness of rules. It also proposes guiding principles for future reforms to strike a better balance between simplicity, flexibility, and enforceability. Read the blog

Balancing Simplicity, Flexibility, and Enforceability

Second-Generation Fiscal Rules

Victor Duarte Lledo

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