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| dc.title | Fiscal Rule Quality and Economic Growth |
| dc.contributor.author | Valencia, Oscar |
| dc.contributor.author | Uribe, Jorge M. |
| dc.contributor.orgunit | Country Department Central America, Haiti, Mexico, Panama and the Dominican Republic |
| dc.date.available | 2026-11-12T00:11:00 |
| dc.date.issue | 2026-11-12T00:11:00 |
| dc.description.abstract | We study the effect of fiscal rules on short- and medium-term real economic growth, explicitly considering the mediating role of rule quality. Using a panel dataset covering 89 countries from 2000 to 2024, we estimate state-dependent local projections with country fixed effects to assess how fiscal rules influence growth under different quality frameworks. Our results show that the effects on growth associated to fiscal rules enacting depend critically on their quality: implementation of rules within low-quality fiscal frameworks are associated with negative expected growth outcomes. On the contrary, implementation under high-quality frameworks is associated with a positive and sustained growth response, particularly within the first three years after implementation. Our analysis also confirms the importance of controlling for debt dynamics, as the debt-to-GDP ratio is consistently significant at different horizons in our empirical specifications, especially for the low-quality state. Overall, our findings highlight that the effectiveness of fiscal rules extends beyond just their adoption and, critically depends on the strength of the underlying institutional and procedural frameworks. These results carry important policy implications for the design of fiscal frameworks that balance credibility and flexibility, ensuring that fiscal rules contribute both to macroeconomic stability and to sustained growth. |
| dc.format.extent | 20 |
| dc.identifier.doi | http://dx.doi.org/10.18235/0014605 |
| dc.identifier.url | https://publications.iadb.org/publications/english/document/Fiscal-Rule-Quality-and-Economic-Growth.pdf |
| dc.language.iso | en |
| dc.publisher | Inter-American Development Bank |
| dc.subject | Fiscal Policy |
| dc.subject | Development Economics |
| dc.subject | Fiscal Rule |
| dc.subject | Economy |
| dc.subject | Public Debt |
| dc.subject | Gross Domestic Product |
| dc.subject | Conflicts Resolution |
| dc.subject.jelcode | E32 - Business Fluctuations • Cycles |
| dc.subject.jelcode | E61 - Policy Objectives • Policy Designs and Consistency • Policy Coordination |
| dc.subject.jelcode | E62 - Fiscal Policy |
| dc.subject.jelcode | H30 - Fiscal Policies and Behavior of Economic Agents: General |
| dc.subject.jelcode | H63 - Debt • Debt Management • Sovereign Debt |
| dc.type | Technical Notes |
| idb.identifier.pubnumber | IDB-TN-03432 |
| idb.operation | RG-T4529 |