Published on January 3, 2023 – Updated on February 2, 2023

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Fiscal rules and the composition of public spending

Estimations performed on a large database show that public investment is generally only modestly affected by fiscal rules, contrary to the significant decrease in public consumption. Nevertheless, these results are different among several types of fiscal rules and in developed countries compared to developing countries. Beyond the presence of a fiscal rule, its characteristics can significantly influence its effect on the composition of public spending.

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Reference:
Vinturis, C. (2022) How do fiscal rules shape governments' spending behavior? Economic Inquiry.