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Credibility of fiscal policies and independent fiscal bodies

Frank Naert (UGent)
(2010)
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Abstract
In this paper we address the problem of credibility in fiscal policy. In many instances fiscal policy as conducted by governments is not perceived as credible. The targets set forward by government are often not met and usually the divergence is on the negative side. Taxes are overestimated and spending is underestimated, leading to a deficit bias and growing indebtedness of governments. To enhance the credibility of fiscal policy several schemes are put forward. Most frequently used are fiscal rules that replace discretionary decision making. Fiscal rules however are difficult to sanction and although they can improve the quality of fiscal policy, they do not guarantee sound fiscal policy. Therefore it is sometimes suggested to install fiscal councils on top of the fiscal rules. Fiscal councils with tasks in forecasting and assessing fiscal policy have been and are being introduced in more and more countries. Some economists want to go further however and propose to establish fiscal councils with independent powers to conduct fiscal policy within the borderlines that parliament lays down. In this paper these tendencies are analyzed.
Keywords
fiscal rules, credibility, budget institutions, fiscal agencies

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Citation

Please use this url to cite or link to this publication:

Chicago
Naert, Frank. 2010. “Credibility of Fiscal Policies and Independent Fiscal Bodies.” In .
APA
Naert, F. (2010). Credibility of fiscal policies and independent fiscal bodies. Presented at the International Association of Schools and Institutions of Administration.
Vancouver
1.
Naert F. Credibility of fiscal policies and independent fiscal bodies. 2010.
MLA
Naert, Frank. “Credibility of Fiscal Policies and Independent Fiscal Bodies.” 2010. Print.
@inproceedings{1086232,
  abstract     = {In this paper we address the problem of credibility in fiscal policy. In many instances fiscal policy as conducted by governments is not perceived as credible. The targets set forward by government are often not met and usually the divergence is on the negative side. Taxes are overestimated and spending is underestimated, leading to a deficit bias and growing indebtedness of governments. To enhance the credibility of fiscal policy several schemes are put forward. Most frequently used are fiscal rules that replace discretionary decision making. Fiscal rules however are difficult to sanction and although they can improve the quality of fiscal policy, they do not guarantee sound fiscal policy. Therefore it is sometimes suggested to install fiscal councils on top of the fiscal rules. Fiscal councils with tasks in forecasting and assessing fiscal policy have been and are being introduced in more and more countries. Some economists want to go further however and propose to establish fiscal councils with independent powers to conduct fiscal policy within the borderlines that parliament lays down. In this paper these tendencies are analyzed.},
  author       = {Naert, Frank},
  keyword      = {fiscal rules,credibility,budget institutions,fiscal agencies},
  language     = {eng},
  location     = {Nusa Dua, Bali, Indonesia},
  title        = {Credibility of fiscal policies and independent fiscal bodies},
  year         = {2010},
}