Budget institutions and the positive theory of fiscal policy.

摘要

There is much interest in the factors determining fiscal policy in order to explain existing differences in policy outcomes between countries and within countries over time. Recently, political institutions have emerged as the set of determinants thought to be most influential in explaining these differences. However, extant studies are problematic since they have not derived the full range of implications from theory, they lack sufficient evidentiary support for their claims, and/or they do not pay particular attention to the actors and institutions most influential in determining fiscal policy. This study examines the effects of budget institutions on fiscal policy outcomes. These are the set of protocols and practices used to draft, approve, and implement budgets. Since the budget explicates the Government's fiscal plans, budget institutions are the most proximal institutions determining fiscal policy. This study uses survey responses to develop indices of three budget institutions: fiscal rules, fiscal transparency, and procedural rules. Using Ordinary Least Squares regression this study examines the effects of these institutions on the size of government, the composition of expenditures, budget deficits, and government debt among a sample of 83 countries. The results suggest that countries with stringent fiscal rules, transparent budget procedures, and centralized procedural rules, are associated with smaller governments, less transfers and subsidies spending, smaller budget deficits, and less debt. While this is not the first study to examine budget institutions and fiscal policy, it contributes to this research agenda by being the largest such study to date, in terms of both country and regional coverage, and the most comprehensive in scope with regard to the set of policy outcomes examined. Most importantly, its conclusions provide countries with a set of initial policy prescriptions for improving fiscal policy performance.