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The analysis of budget rules and macroeconomic implications in several developed economies

Popescu, Razvan-Florin and Prodan, Sergiu (2010): The analysis of budget rules and macroeconomic implications in several developed economies. Published in: Budgetary Research Review , Vol. 2, No. 2/2010 (2010): pp. 60-91.

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Abstract

The purpose of budget rules can be explored from the perspective of the expected results, obtained by their enforcement. On one hand, they are meant to improve or at least maintain certain levels of the budgetary deficit and public debt. On the other hand, they can help or limit the economic development perspectives of states, influencing important macroeconomic variables. Starting with the evolution of the budgetary deficit, under the hypothesis that the most important determinant lies within the budget rules implementation process, this analysis is focused on the influence of several budget rules on the nominal interest rate. Our motivation is based on the need to present the differences between the analyzed countries in order to reveal if there were effects from the recession periods. The numeric part was made using panel data from eight west European countries along with Australia and New Zeeland. The analysis is compound of a two method estimation of the relationship between nominal interest rate and several factors that are strongly connected with the budget rules.

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