 Anchor me: the benefits and challenges of fiscal responsibilityAsian-Pacific Economic Literature, 2019, vol. 33, issue 1, 33-47 Abstract: This paper discusses the benefits and challenges of implementing a rule‐based fiscal responsibility framework, using the Philippines as a case study. It estimates structural measures of the fiscal stance over the period 1980–2016 and applies a stochastic simulation model to determine the optimal set of fiscal rules. The empirical analysis indicates that discretionary fiscal policy has been procyclical, and the degree of procyclicality has increased in recent years. While the national government's nonbinding ceiling on the overall budget deficit is helpful, it does not constitute an appropriate operational target to guide fiscal policy over the economic cycle and necessarily ensure that the fiscal stance meets the government's intertemporal budget constraint. To this end, I use stochastic simulations and show the macroeconomic benefits of a well‐designed fiscal responsibility law that enshrines explicit fiscal rules designed for countercyclical policy and long‐term debt sustainability and an independent fiscal council that improves accountability and transparency. Date: 2019 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:apacel:v:33:y:2019:i:1:p:33-47 Ordering information: This journal article can be ordered from Access Statistics for this article Asian-Pacific Economic Literature is currently edited by Yixiao Zhou More articles in Asian-Pacific Economic Literature from The Crawford School, The Australian National University |
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