Fiscal Rules for Sub-Central Governments: Design and Impact

76 Pages Posted: 19 Dec 2005

See all articles by Douglas Sutherland

Douglas Sutherland

Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO)

Robert Price

Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO)

Isabelle Joumard

Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO)

Date Written: December 2005

Abstract

Against a background of mounting demands for spending on services provided by sub-central governments, this paper examines how fiscal rules can help to ensure that pressure on resources is minimised and available resources are used efficiently. Drawing on questionnaire responses and other sources, this paper gives a detailed picture of fiscal rules for sub-central governments in place among a number of OECD countries. The paper examines the rationales for using fiscal rules, the various impacts fiscal rules can have, the factors making for effective implementation and the interactions between the various types of rule. It then constructs a number of synthetic sub-indicators designed to assess the extent to which sub-central government fiscal frameworks exhibit favourable characteristics for the achievement of fiscal objectives. It concludes with the construction of a composite indicator based on the combined impacts in the different areas of fiscal policy.

Keywords: Sub-central government, fiscal rules, fiscal discipline, indicators

JEL Classification: C43, D78, H71, H72, H74, H81

Suggested Citation

Sutherland, Douglas and Price, Robert and Joumard, Isabelle, Fiscal Rules for Sub-Central Governments: Design and Impact (December 2005). OECD Working Paper No. 52, Available at SSRN: https://ssrn.com/abstract=870443 or http://dx.doi.org/10.2139/ssrn.870443

Douglas Sutherland (Contact Author)

Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO) ( email )

2 rue Andre Pascal
Paris Cedex 16, MO 63108
France

Robert Price

Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO) ( email )

2 rue Andre Pascal
Paris Cedex 16, MO 63108
France

Isabelle Joumard

Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO) ( email )

2 rue Andre Pascal
Paris Cedex 16, MO 63108
France