Multiyear budgets and fiscal performance: Panel data evidence

Razvan Vlaicu, Marijn Verhoeven, Francesco Grigoli () and Zachary Mills

Journal of Public Economics, 2014, vol. 111, issue C, 79-95

Abstract: In the last two decades more than 120 countries have adopted a multiyear budget process (Medium-Term Framework, or MTF) that enables the central government to set multiyear fiscal targets. This paper analyzes a newly-collected dataset of worldwide MTF adoptions during 1990–2008. It exploits within-country variation in adoption in a dynamic panel framework to estimate MTFs' impacts on aggregate as well as sectoral measures of fiscal performance. We find that on average multiyear budgeting improves budget balance by about 2 percentage points with more advanced MTF phases having a larger impact. Higher-phase MTFs also reduce health spending volatility, while only the top-phase MTF has a measurable impact on health sector technical efficiency.

Keywords: Budget institutions; Medium-term framework; Fiscal discipline; Health sector; Technical efficiency; Dynamic panel data analysis (search for similar items in EconPapers)
JEL-codes: E62 H51 H62 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (20)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:111:y:2014:i:c:p:79-95

DOI: 10.1016/j.jpubeco.2013.12.011

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