The influence of fiscal policymaking frameworks on fiscal outcomes : evidence from the European Union

Siebrits, Franz Krige (2014-12)

Thesis (PhD)--Stellenbosch University, 2014.

Thesis

ENGLISH ABSTRACT: This dissertation explores the potential of centralised, top-down procedural rules (also known as budget-process rules) and independent fiscal councils to complement numerical fiscal rules as devices for preventing fiscal profligacy. To this end, it studies the connections between fiscal policymaking frameworks and fiscal outcomes in fourteen European Union countries in the years from 1998 to 2004. The fiscal policymaking frameworks of these countries contained various configurations of numerical rules, procedural rules and fiscal councils, and the study uses differences in the degrees to which the countries complied with the supranational rules of the Stability and Growth Pact (SGP) as a measure of the efficacy of these configurations at preventing fiscal profligacy. The analysis itself consists of two parts. The first part – a cross-sectional analysis of all fourteen countries – uses a set-theoretic technique known as fuzzy-set qualitative comparative analysis (fsQCA) to identify connections between various configurations of the elements of fiscal policymaking frameworks and the degrees to which the countries complied with the SGP rules. These connections are interpreted in terms of sufficiency and necessity and used to identify pathways to consistent compliance with the SGP rules. The second part of the analysis consists of case studies of three of the fourteen countries (Finland, France and Ireland). The case studies are used to verify aspects of the set-theoretic analysis, namely the specification of the set-theoretic model (especially the influence of the preferences of policymakers on compliance with the SGP rules), the accuracy of the quantitative measures of the efficacy of elements of fiscal policymaking frameworks, the explanatory value of the solution pathways and the country-level relevance of two hypotheses derived from the results of the analysis. The set-theoretic analysis finds some evidence of the efficacy of fiscal policymaking frameworks consisting of combinations of numerical rules, procedural rules and fiscal councils, but establishes that such multifaceted frameworks were neither necessary nor sufficient for preventing fiscal profligacy. The study also shows, in tentative fashion in the set-theoretic analysis and more forcefully in the case studies, that the preferences of policymakers were critical determinants of the effectiveness of all types of fiscal policymaking frameworks. Hence, it concludes that the potential of multifaceted fiscal policymaking frameworks should not be exaggerated. In addition, it argues that an unwavering commitment to fiscal prudence complemented by policymaking framework elements chosen to overcome specific incentive distortions is a more promising approach for preventing fiscal profligacy than such multifaceted frameworks per se. More generally, the findings of the study confirm the scope for using fsQCA and other case-oriented methods to complement regression-based analyses of the effectiveness of fiscal policymaking frameworks.

AFRIKAANSE OPSOMMING: Hierdie proefskrif ondersoek die potensiaal van gesentraliseerde, bo-na-onder begrotingsprosesreëls en onafhanklike fiskale rade om numeriese reëls aan te vul as meganismes om fiskale spandabelrigheid te verhinder. Met hierdie doel voor oë bestudeer dit die verbande tussen fiskale beleidmakingsraamwerke en fiskale uitkomste in veertien lidlande van die Europese Unie in die jare van 1998 tot 2004. Die fiskale beleidmakingsraamwerke van hierdie lande het verskeie konfigurasies van numeriese reëls, begrotingsprosesreëls en fiskale rade bevat, en die studie gebruik verskille in die mate waartoe die lande die bonasionale reëls van die Stabiliteits- en Groeiverdrag (“Stability and Growth Pact”, oftewel SGP) nagekom het as ‘n maatstaf van hierdie konfigurasies se doelmatigheid met betrekking tot die verhindering van fiskale spandabelrigheid. Die ontleding self bestaan uit twee dele. Die eerste deel – ‘n kruissnitontleding van al veertien lande – gebruik ‘n versamelingsteoretiese tegniek was as “fuzzy-set qualitative comparative analysis” (fsQCA) bekend staan om verbande te identifiseer tussen verskillende konfigurasies van die elemente van fiskale beleidmakingsraamwerke en die mate waartoe die lande die SGP-reëls nagekom het. Hierdie verbande word aan die hand van genoegsaamheid en noodsaaklikheid geïnterpreteer en gebruik om roetes na nakoming van die SGP-reëls te identifiseer. Die tweede deel van die ontleding bestaan uit gevallestudies van drie van die veertien lande (Finland, Frankryk en Ierland). Die gevallestudies word gebruik om aspekte van die versamelingsteoretiese ontleding te toets, naamlik die spesifikasie van die versamelingsteoretiese model (veral die invloed van die voorkeure van beleidmakers op nakoming van die SGP-reëls), die akkuraatheid van die kwantitatiewe maatstawwe van die doelmatigheid van elemente van fiskale beleidmakingsraamwerke, die verklarende waarde van die oplossingsroetes asook die tersaaklikheid vir individuele lande van twee hipoteses wat uit die resultate van die ontleding voortvloei. Die versamelingsteoretiese ontleding vind aanduidings van die doelmatigheid van fiskale beleidsraamwerke wat kombinasies van numeriese reëls, begrotingsprosesreëls en fiskale rade bevat, maar stel vas dat sulke saamgestelde raamwerke nóg noodsaaklik nóg genoegsaam vir die verhindering van fiskale spandabelrigheid was. Die studie toon ook, op tentatiewe wyse in die versamelingsteoretiese ontleding en meer oortuigend in die gevallestudies, dat die voorkeure van beleidmakers deurslaggewende bepalers van die doelmatigheid van alle tipes beleidmakingsraamwerke was. Dit kom dus tot die gevolgtrekking dat die potensiaal van saamgestelde fiskale beleidmakingsraamwerke nie oordryf moet word nie. Voorts voer dit aan dat ‘n onwrikbare verbintenis tot fiskale dissipline, aangevul deur elemente van beleidsmakingsraamwerke wat gekies is om spesifieke verwringings van aansporings te bowe te kom, groter belofte inhou as ‘n benadering om fiskale spandabelrigheid te verhinder as sulke saamgestelde raamwerke per se. Op ‘n breër vlak bevestig die studie dat daar heelwat ruimte bestaan om fsQCA en ander metodes wat op gevalle konsentreer, te gebruik om regressie-ontledings van die doelmatigheid van fiskale beleidmakingsraamwerke aan te vul.

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