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Public Choice

, Volume 136, Issue 1–2, pp 123–138 | Cite as

Do fiscal rules cause budgetary outcomes?

  • Signe Krogstrup
  • Sébastien Wälti
Article

Abstract

This paper focuses on the observed empirical relationship between fiscal rules and budget deficits, and examines whether this correlation is driven by an omitted variable, namely voter preferences. We make use of two different estimation methods to capture voter preferences in a panel of Swiss sub-federal jurisdictions. First, we include a recently constructed measure of fiscal preferences. Second, we capture preferences through fixed effects with a structural break as women are enfranchised. We find that fiscal rules continue to have a significant impact on real budget balances.

Keywords

Fiscal policy Fiscal rules Fiscal institutions Budget deficits Fiscal preferences Endogeneity 

JEL

C2 D7 E6 H6 

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Copyright information

© Springer Science+Business Media, LLC. 2008

Authors and Affiliations

  1. 1.Swiss National BankZürichSwitzerland

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