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Budget Rules, Government Efficiency and Economic Growth

Dmitriy Skrypnik ()

Journal of the New Economic Association, 2016, vol. 30, issue 2, 12-32

Abstract: The paper reviews international experience of budget balance, expenditure and debt rules implementation. Using dynamic panel data regressions with interactive term we show that character of rules influence on economic growth rate is determined by the government efficiency. Rules would not work in case of low-efficient government, which is not able to adhere the rule. In case of middle-efficient government the rule could be an obstacle for optimal budget policy, which requires flexibility. The efficient governments adjust and readjust the rule precisely, that doesn't lead to restriction of economic growth. Growth effect of rules occurred only when government achieved high efficient level. We show that impact of rules on the Russian economy growth is negative.

Keywords: fiscal rule; economy growth; dynamic panel regression (search for similar items in EconPapers)
JEL-codes: H30 H5 O11 (search for similar items in EconPapers)
Date: 2016
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Handle: RePEc:nea:journl:y:2016:i:30:p:12-32