 Measurement of fiscal rules: Introducing the application of partially ordered set (POSET) theoryHarald Badinger and Wolf Heinrich Reuter Journal of Macroeconomics, 2015, vol. 43, issue C, 108-123 Abstract: Data on (economic) institutions are often available only as observations on ordinal, inherently incomparable properties, which are then typically aggregated to a composite index in the empirical social science literature. From a methodological perspective, the present paper advocates the application of partially ordered set (POSET) theory as an alternative approach. Its main virtue is that it takes the ordinal nature of the data seriously and dispenses with the unavoidably subjective assignment of weights to incomparable properties, maintains a high standard of objectivity, and can be applied in various fields of economics. As an application, the POSET approach is then used to calculate new indices on the stringency of fiscal rules for 81 countries over the period 1985–2012 based on recent data by IMF (2012). The derived measures of fiscal rules are used to test their significance for public finances in a fiscal reaction function and compare the POSET with the composite index approach. Keywords: Partially ordered set theory (POSET); Index functions; Fiscal rules; Public finances (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:43:y:2015:i:c:p:108-123 DOI: 10.1016/j.jmacro.2014.09.005 Access Statistics for this article Journal of Macroeconomics is currently edited by Douglas McMillin and Theodore Palivos More articles in Journal of Macroeconomics from Elsevier |
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