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Title:Fiscal rules and composition bias in OECD countries PDF Logo
Authors:Dahan, Momi
Strawczynski, Michel
Issue Date:2010
Series/Report no.:CESifo working paper Public Finance 3088
Abstract:Using a sample of OECD countries, this paper finds that while fiscal rules succeeded in reducing total government expenditures and budget deficits in the medium term, they significantly affected the composition of government expenditure: the ratio of social transfers to government consumption declined. In contrast, we do not find a stable effect of fiscal rules on public investment. It is shown that the compositional shift against social transfers is beyond 'from welfare to work' policies, which have been adopted by many OECD countries during the nineties. Our empirical examination reveals that the reduction of social transfers relative to government consumption did not occur in countries with strong legal protection to social rights.
Subjects:fiscal rules
government deficit
government expenditure
expenditures composition
JEL:H00
H30
E62
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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