The Effectiveness of Fiscal Rules - The Case of Switzerland

Marianne Yousseff Iskandar
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Marianne Yousseff Iskandar: Department of Economics, in German University in Cairo, Egypt.

Journal of Social and Administrative Sciences, 2016, vol. 3, issue 3, 264-267

Abstract: This paper aims to measure the effectiveness of fiscal rules. Fiscal rules are constraints on fiscal policy that limit budgetary outcomes. Some studies in the literature have examined their effectiveness using a stringency index. Arguing this index possesses some arbitrariness, this study measured the effectiveness of fiscal rules using cluster analysis. This cluster analysis resulted in dividing the data into two clusters. Using panel data of 26 Swiss cantons plus the Swiss federation over the period 1990 - 2012, a Least Squares Dummy Variable econometric model was conducted. The findings indicate that fiscal rules have a favorable effect. It was found that the frameworks of cantons in cluster 1 are more effective in decreasing cantonal deficits than those of cluster 2. Furthermore, it was found that cantons in cluster 1 have lower debt levels in comparison to cantons in cluster 2.

Keywords: Fiscal rules; Qualitative data analysis; Regional governments; Government spending (search for similar items in EconPapers)
JEL-codes: C50 C80 H30 H50 H60 H70 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ksp:journ4:v:3:y:2016:i:3:p:264-267

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