Good, Bad or Ugly? On the Effects of Fiscal Rules with Creative Accounting

Gian Maria Milesi-Ferretti ()

No 2000/172, IMF Working Papers from International Monetary Fund

Abstract: Do fiscal rules likely lead to fiscal adjustment, or do they encourage the use of ‘creative accounting’? This question is studied with a model in which fiscal rules are imposed on ‘measured’ fiscal variables, which can differ from ‘true’ variables because there is a margin for creative accounting. The probability of detecting creative accounting depends on its size and the transparency of the budget. The model studies the effects on fiscal policy of different rules, separating structural from cyclical effects, and examines how these effects depend on the underlying fiscal distortion and on the degree of transparency of the budget.

Keywords: WP; budget deficit; myopic government; budget rule; Fiscal rules; creative accounting; budget transparency; loss function; government type; government preference; Budget planning and preparation; Government debt management (search for similar items in EconPapers)
Pages: 26
Date: 2000-10-01
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Citations: View citations in EconPapers (35)

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Related works:
Journal Article: Good, bad or ugly? On the effects of fiscal rules with creative accounting (2004)
Working Paper: Good, Bad or Ugly? On the Effects of Fiscal Rules with Creative Accounting (2001)
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