TY - BOOK ID - 84783133 TI - Flexible Fiscal Rules and Countercyclical Fiscal Policy AU - Guerguil, Martine. AU - Mandon, Pierre. AU - Tapsoba, Rene. PY - 2016 SN - 1498302955 1484397320 1513529064 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Macroeconomics KW - Public Finance KW - Structure, Scope, and Performance of Government KW - National Budget, Deficit, and Debt: General KW - Fiscal Policy KW - National Government Expenditures and Related Policies: General KW - National Government Expenditures and Related Policies: Infrastructures KW - Other Public Investment and Capital Stock KW - Public finance & taxation KW - Fiscal rules KW - Fiscal policy KW - Public investment spending KW - Expenditure KW - Total expenditures KW - Expenditures, Public KW - Public investments UR - https://www.unicat.be/uniCat?func=search&query=sysid:84783133 AB - This paper assesses the impact of different types of flexible fiscal rules on the procyclicality of fiscal policy with propensity scores-matching techniques, thus mitigating traditional self-selection problems. It finds that not all fiscal rules have the same impact: the design matters. Specifically, investment-friendly rules reduce the procyclicality of both overall and investment spending. The effect appears stronger in bad times and when the rule is enacted at the national level. The introduction of escape clauses in fiscal rules does not seem to affect the cyclical stance of public spending. The inclusion of cyclical adjustment features in spending rules yields broadly similar results. The results are mixed for cyclically-adjusted budget balance rules: enacting the latter is associated with countercyclical movements in overall spending, but with procyclical changes in investment spending. Structural factors, such as past debt, the level of development, the volatility of terms of trade, natural resources endowment, government stability, and the legal enforcement and monitoring arrangements backing the rule also influence the link between fiscal rules and countercyclicality. The results are robust to a wide set of alternative specifications. ER -