Incentives For Public Investment Under Fiscal Rules

Author : Jack M. Mintz,Michael Smart
Publisher : World Bank Publications
Page : 32 pages
File Size : 43,8 Mb
Release : 2006
Category : Capital budget
ISBN : 8210379456XXX

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Incentives for Public Investment Under Fiscal Rules by Jack M. Mintz,Michael Smart Pdf

The authors explore the relationship between fiscal rules and capital budgeting. The current budgetary approach to limit deficits to a fixed portion of GDP or to balance budgets could undermine incentives to invest in public capital with long-run returns since politicians concerned about electoral prospects would favor expenditures providing immediate benefits to their voters. An alternative budgetary approach is to separate capital from current revenues and expenditures and relax fiscal constraints by allowing governments to finance capital expenditures with debt, as suggested by the golden rule approach to capital funding. But the effect of capital budgeting would be to provide opportunities to politicians to escape the fiscal rule constraints by shifting current expenditures into capital accounts that are difficult to measure properly, thereby leading to increased borrowing. As an alternative, the authors propose a modified golden rule limiting debt finance to a proportion of the government's investment in self-liquidating assets.

Author : Jack M. Mintz,Michael Smart
Publisher : Unknown
Page : 128 pages
File Size : 50,9 Mb
Release : 2012
Category : Electronic
ISBN : OCLC:931673437

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Incentives for Public Investment Under Fiscal Rules by Jack M. Mintz,Michael Smart Pdf

The authors explore the relationship between fiscal rules and capital budgeting. The current budgetary approach to limit deficits to a fixed portion of GDP or to balance budgets could undermine incentives to invest in public capital with long-run returns since politicians concerned about electoral prospects would favor expenditures providing immediate benefits to their voters. An alternative budgetary approach is to separate capital from current revenues and expenditures and relax fiscal constraints by allowing governments to finance capital expenditures with debt, as suggested by the golden rule approach to capital funding. But the effect of capital budgeting would be to provide opportunities to politicians to escape the fiscal rule constraints by shifting current expenditures into capital accounts that are difficult to measure properly, thereby leading to increased borrowing. As an alternative, the authors propose a modified golden rule limiting debt finance to a proportion of the government's investment in self-liquidating assets.

Author : Jack Mintz
Publisher : Unknown
Page : 32 pages
File Size : 51,6 Mb
Release : 2016
Category : Electronic
ISBN : OCLC:1290703907

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Incentives for Public Investment Under Fiscal Rules by Jack Mintz Pdf

The authors explore the relationship between fiscal rules and capital budgeting. The current budgetary approach to limit deficits to a fixed portion of GDP or to balance budgets could undermine incentives to invest in public capital with long-run returns since politicians concerned about electoral prospects would favor expenditures providing immediate benefits to their voters. An alternative budgetary approach is to separate capital from current revenues and expenditures and relax fiscal constraints by allowing governments to finance capital expenditures with debt, as suggested by the golden rule approach to capital funding. But the effect of capital budgeting would be to provide opportunities to politicians to escape the fiscal rule constraints by shifting current expenditures into capital accounts that are difficult to measure properly, thereby leading to increased borrowing. As an alternative, the authors propose a modified golden rule limiting debt finance to a proportion of the government's investment in self-liquidating assets.

Author : Leonard Mühlenweg,Lena Gerling
Publisher : Unknown
Page : 0 pages
File Size : 47,5 Mb
Release : 2023
Category : Electronic
ISBN : OCLC:1391097287

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Do Fiscal Rules Reduce Public Investment? by Leonard Mühlenweg,Lena Gerling Pdf

This paper analyses the impact of fiscal rules on different public spending categories, namely public expenditure and investment, at the subnational level in Europe. Building on the notion of the deficit bias, we suspect that in the presence of fiscal rules, politicians have an incentive to reduce public spending through disproportionate cuts in investments. To empirically test this hypothesis, we focus on subnational administrative levels since budget reallocations can be expected to be pronounced at these levels and because the empirical evidence here is scarce. We introduce a new index based on partially ordered set theory (POSET), using the EC's fiscal rules dataset, which allows us to analyze the stringency of fiscal rules for different levels of government. Our balanced dataset covers 179 NUTS2 regions in 14 EU member states from 1995 to 2018. The empirical analysis is based on Within, GMM, and instrumental variable estimators. Our empirical findings are highly robust. In our baseline model, a one standard-deviation increase in our fiscal rules stringency index reduces overall public expenditure by up to 1.28 percent, while investment declines by more than 4 percent. The results imply that more stringent fiscal rules lead to a disproportionate reduction in public investment as compared to overall expenditure.

Author : International Monetary Fund. Fiscal Affairs Dept.
Publisher : International Monetary Fund
Page : 73 pages
File Size : 47,6 Mb
Release : 2009-12-11
Category : Business & Economics
ISBN : 9781498335164

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Fiscal Rules—Anchoring Expectations for Sustainable Public Finances by International Monetary Fund. Fiscal Affairs Dept. Pdf

The sharp increase in fiscal deficits and public debt in most advanced and several developing economies has raised concerns about the sustainability of public finances and highlighted the need for a significant adjustment over the medium term. This paper assesses the usefulness of fiscal rules in supporting fiscal consolidation, discusses the design and implementation of rules based on a new data base spanning the whole Fund membership, and explores the fiscal framework that could be adopted as countries emerge from the crisis.

Author : Luis Serven
Publisher : World Bank Publications
Page : 36 pages
File Size : 44,8 Mb
Release : 2016
Category : Electronic
ISBN : 8210379456XXX

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Fiscal Rules, Public Investment, and Growth by Luis Serven Pdf

Solvency is an intertemporal concept, relating to the present value of revenues and expenditures, and encompassing both assets and liabilities. But the standard practice among policy makers, financial market participants and international financial institutions is to assess the strength of the fiscal accounts solely on the basis of the cash deficit. Short-term cash flows matter, but a preponderant focus on them can encourage governments to invest too little, especially during episodes of fiscal tightening. This has potentially adverse consequences for growth and, paradoxically, even for fiscal solvency itself. The paper offers an overview of the links between fiscal targets, public investment, and public sector solvency. After reviewing the international experience with public investment under fiscal adjustment, the paper lays out an analytical framework to illustrate the consequences of using the public deficit as a guide to solvency. The paper then discusses some alternatives to conventional cash deficit rules and their implications for investment and fiscal solvency.

Author : Ana Teresa Tavares-Lehmann,Perrine Toledano,Lise Johnson,Lisa Sachs
Publisher : Columbia University Press
Page : 369 pages
File Size : 40,5 Mb
Release : 2016-07-12
Category : Business & Economics
ISBN : 9780231541640

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Rethinking Investment Incentives by Ana Teresa Tavares-Lehmann,Perrine Toledano,Lise Johnson,Lisa Sachs Pdf

Governments often use direct subsidies or tax credits to encourage investment and promote economic growth and other development objectives. Properly designed and implemented, these incentives can advance a wide range of policy objectives (increasing employment, promoting sustainability, and reducing inequality). Yet since design and implementation are complicated, incentives have been associated with rent-seeking and wasteful public spending. This collection illustrates the different types and uses of these initiatives worldwide and examines the institutional steps that extend their value. By combining economic analysis with development impacts, regulatory issues, and policy options, these essays show not only how to increase the mobility of capital so that cities, states, nations, and regions can better attract, direct, and retain investments but also how to craft policy and compromise to ensure incentives endure.

Author : International Monetary Fund
Publisher : International Monetary Fund
Page : 257 pages
File Size : 48,9 Mb
Release : 2015-04-20
Category : Business & Economics
ISBN : 9781498344654

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Fiscal Policy and Long-Term Growth by International Monetary Fund Pdf

This paper explores how fiscal policy can affect medium- to long-term growth. It identifies the main channels through which fiscal policy can influence growth and distills practical lessons for policymakers. The particular mix of policy measures, however, will depend on country-specific conditions, capacities, and preferences. The paper draws on the Fund’s extensive technical assistance on fiscal reforms as well as several analytical studies, including a novel approach for country studies, a statistical analysis of growth accelerations following fiscal reforms, and simulations of an endogenous growth model.

Author : Guillermo E. Perry,Luis Serv n,Rodrigo Suesc n
Publisher : World Bank Publications
Page : 350 pages
File Size : 46,9 Mb
Release : 2007-10-19
Category : Business & Economics
ISBN : 0821370855

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Fiscal Policy, Stabilization, and Growth by Guillermo E. Perry,Luis Serv n,Rodrigo Suesc n Pdf

Fiscal policy in Latin America has been guided primarily by short-term liquidity targets whose observance was taken as the main exponent of fiscal prudence, with attention focused almost exclusively on the levels of public debt and the cash deficit. Very little attention was paid to the effects of fiscal policy on growth and on macroeconomic volatility over the cycle. Important issues such as the composition of public expenditures (and its effects on growth), the ability of fiscal policy to stabilize cyclical fluctuations, and the currency composition of public debt were largely neglected. As a result, fiscal policy has often amplified cyclical volatility and dampened growth. 'Fiscal Policy, Stabilization, and Growth' explores the conduct of fiscal policy in Latin America and its consequences for macroeconomic stability and long-term growth. In particular, the book highlights the procyclical and anti-investment biases embedded in the region's fiscal policies, explores their causes and macroeconomic consequences, and asesses their possible solutions.

Author : Massimo Florio
Publisher : Edward Elgar Publishing
Page : 329 pages
File Size : 43,6 Mb
Release : 2011-01-01
Category : Business & Economics
ISBN : 184980477X

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Public Investment, Growth and Fiscal Constraints by Massimo Florio Pdf

This book makes a unique contribution in advancing understanding of the fiscal condition and growth potential of the New Member States of the European Union. It provides new data, policy evaluation, and offers national and regional perspectives. The core research questions are the effect of public investment in the context of macroeconomic disequilibrium and how it is possible to finance capital accumulation in the present and future conditions of mounting public sector debt. The contributors reveal that there is now a convincing case for public investment as an essential driver of convergence and growth in Europe. However, a new international and inter-generational fiscal pact to frame a more optimistic view of the role of government is needed. This book explores how public investment matters for growth, how fiscal conditions may support investment, and the role EU regional policy can have in terms of structural change and investment needs. Public Investment, Growth and Fiscal Constraints provides new data analyses on the EU New Member States in Central and Eastern Europe making it an essential tool for academics, students and practitioners interested in public finance and European Economics. The structural and public finance issues in these former transition economies raised in this book will also strongly appeal to policymakers, officials and consultants. The book is based on an independent research project of the University of Milan, supported by the European Investment Bank.

Author : Dean T. Jamison,Joel G. Breman,Anthony R. Measham,George Alleyne,Mariam Claeson,David B. Evans,Prabhat Jha,Anne Mills,Philip Musgrove
Publisher : World Bank Publications
Page : 1449 pages
File Size : 48,7 Mb
Release : 2006-04-02
Category : Medical
ISBN : 9780821361801

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Disease Control Priorities in Developing Countries by Dean T. Jamison,Joel G. Breman,Anthony R. Measham,George Alleyne,Mariam Claeson,David B. Evans,Prabhat Jha,Anne Mills,Philip Musgrove Pdf

Based on careful analysis of burden of disease and the costs ofinterventions, this second edition of 'Disease Control Priorities in Developing Countries, 2nd edition' highlights achievable priorities; measures progresstoward providing efficient, equitable care; promotes cost-effectiveinterventions to targeted populations; and encourages integrated effortsto optimize health. Nearly 500 experts - scientists, epidemiologists, health economists,academicians, and public health practitioners - from around the worldcontributed to the data sources and methodologies, and identifiedchallenges and priorities, resulting in this integrated, comprehensivereference volume on the state of health in developing countries.

Author : Kenneth P. Thomas,International Institute for Sustainable Development. Global Subsidies Initiative
Publisher : Unknown
Page : 70 pages
File Size : 52,5 Mb
Release : 2007-01-01
Category : Capital investments
ISBN : 189478409X

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Investment Incentives by Kenneth P. Thomas,International Institute for Sustainable Development. Global Subsidies Initiative Pdf

Author : William Easterly
Publisher : World Bank Publications
Page : 38 pages
File Size : 47,5 Mb
Release : 2007
Category : Accounting
ISBN : 8210379456XXX

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Walking up the down escalator : public investment and fiscal stability by William Easterly Pdf

Abstract: Fiscal adjustment becomes like walking up the down escalator when growth-promoting spending is cut so much as to lower growth and thus the present value of future tax revenues to a degree that more than offsets the improvement in the cash deficit. Although short-term cash flows matter, a preponderant focus on them encourages governments to invest too little. Cash flow targets also encourage governments to shift investment spending off budget, by seeking private investment in public projects-irrespective of its real fiscal or economic benefits. To evade the action of cash flow targets, some have suggested excluding from their scope certain investments (such as those undertaken by public enterprises deemed commercial or financed by multilaterals). These stopgap remedies might sometimes help protect investment, but they do not provide a satisfactory solution to the underlying problem. Governments can more effectively reduce the biases created by the focus on short-term cash flows by developing indicators of the long-term fiscal effects of their decisions, including accounting and economic measures of net worth, and where appropriate including such measures in fiscal targets or even fiscal rules, replacing the exclusive focus on liquidity and debt.

Author : Floriana Cerniglia,Francesco Saraceno,Andrew Watt
Publisher : Open Book Publishers
Page : 188 pages
File Size : 40,6 Mb
Release : 2023-12-12
Category : Business & Economics
ISBN : 9781805112037

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Financing Investment in Times of High Public Debt by Floriana Cerniglia,Francesco Saraceno,Andrew Watt Pdf

The fourth book in the ‘European Public Investment Outlook’ series focuses on the urgent issue of how to finance needed investment in critical tangible and intangible infrastructure given high levels of public debt, a thorny problem facing many governments across Europe. Drawing on expertise from academics, researchers at public policy institutes and international governance bodies, the contributors analyse the current situation and prospects and propose feasible solutions. Financing Investment in Times of High Public Debt offers a powerful combination of high-level analysis of cross-continental policies and trends, with close examination of specific contexts in France, Italy, Germany and Spain. The chapters in Part II explore challenges including how to finance climate investments, the extent to which national promotional banks can offer solutions, EU budget reform and recent trends in tax progressivity. This book is essential reading for economists, policymakers, and anyone interested in implementing and financing public policy in Europe and wanting to better understand the intricacies of EU governance and institutions.

Author : Rathin Roy,Antoine Heuty
Publisher : Routledge
Page : 522 pages
File Size : 50,8 Mb
Release : 2012-05-31
Category : Business & Economics
ISBN : 9781136565687

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Fiscal Space by Rathin Roy,Antoine Heuty Pdf

With the deadline for achieving the 2015 Millennium Development Goals (MDGs) less than a decade away, the uneven progress is raising important questions about the ability of the international community to 'scale up' its efforts to finance the goals. Securing adequate financing for development has thus become the most pressing issue of the development agenda. This groundbreaking volume, by leading development economists and practitioners, addresses the central concern for policymakers involved in long term planning for the MDGs: how to create 'fiscal space' for the MDGs and strengthen domestic resource mobilization for human development, while ensuring long-term sustainability and freedom from reliance on aid. By looking at the evidence with fresh perspectives, the authors present a novel approach by which fiscal policy can be made to work for the poor, for the long term. Published with UNDP and Revenue Watch.