Making Fiscal Commitments Credible

Michal Horvath and Ludovit Odor

No DP 2/2009, Working and Discussion Papers from Research Department, National Bank of Slovakia

Abstract: The study critically analyzes the weak points of current fiscal institutions in Slovakia, while proposing a new institutional framework. It is based on the concept of the net worth and reflects international experience. The main part of the proposal is additional fiscal rules to the Stability and Growth Pact – a gross debt limit and expenditure ceilings, new rules for the financial management of municipalities, and requirements for greater transparency. It is our proposal to set up a Fiscal Council under the National Council of the Slovak Republic, which would check and monitor fiscal processes and rules. The new framework should increase the credibility of Slovakia when looking for exit strategies following unfavourable impacts of the current economic crisis; it should also lead to lower interest rates and more dynamic and stable growth from the long-term perspective.

Keywords: Fiscal rules; Fiscal Council; Time inconsistence; Net worth (search for similar items in EconPapers)
JEL-codes: E02 E61 E62 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2009-12
New Economics Papers: this item is included in nep-cba, nep-eec and nep-ifn
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:svk:wpaper:1006

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