Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/154305
Authors: 
Nerlich, Carolin
Reuter, Wolf Heinrich
Year of Publication: 
2015
Series/Report no.: 
ECB Working Paper 1872
Abstract: 
In this paper we analyse the interaction of fiscal rules and fiscal space. We find strong evidence for fiscal rules being associated with higher fiscal space. Furthermore, the analysis shows that countries with more fiscal space tend to have higher discretionary expenditures, but that this effect is significantly reduced if fiscal rules are in place. A similar effect can be observed for the procyclicality of fiscal policy, which is significantly higher in an environment of ample fiscal space, while this difference is reduced with fiscal rules. Regarding the different types of fiscal rules, we find the strongest results for expenditure rules and to a lesser extent for balanced budget rules, but none for debt rules.
Subjects: 
discretionary fiscal policy
fiscal rules
fiscal space
procyclicality
JEL: 
E61
E62
H60
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-1685-1
Document Type: 
Working Paper

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