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On the impact of fiscal policy on inflation: The case of fiscal rules

Jocelyne Zoumenou

No 2023-21, EconomiX Working Papers from University of Paris Nanterre, EconomiX

Abstract: This paper examines the impact of fiscal rules on inflation across 79 countries from 1985 to 2021, employing entropy balancing as the methodology. By adopting this approach, the study addresses potential endogeneity concerns and takes into account variations among different country groups, including advanced economies, emerging markets, developing economies, and low-income countries. The primary outcome derived from the analysis indicates a negative relationship between fiscal rules and inflation in emerging and low-income countries. Moreover, this effect is observed for moderate and high inflation rates. These results are robust to different specifications.

Keywords: Fiscal policy; Inflation; Propensity score methodology (search for similar items in EconPapers)
JEL-codes: C31 E31 E61 E62 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2023
New Economics Papers: this item is included in nep-mon
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