Fiscal institutions and fiscal performance.

• Position: Politics and the economy

On June 27-9, the NBER and the Zentrum fur Europpische Integrationsforschung (Center for European Integration) at the University of Bonn co-sponsored a conference on "Fiscal Institutions and Fiscal Performance." The program, which was organized by James M. Poterba of NBER (and MIT) and Juergen von Hagen of the University of Bonn, included thirteen papers addressing a range of questions relating to the economic effects of fiscal institutions. The conference was partly motivated by current debate surrounding the development of the European Monetary Union(EMU). One of the requirements that EMU members must meet is a limitation on the central government's deficit; a key issue is how such an anti-deficit rule would practically affect fiscal policy in EMU member nations.

The conference presentations took three forms: new conceptual insights on the political economy of budget rules; new empirical evidence on the effect of these rules; and case studies on the development of budgetary institutions in various nations. Some researchers presented new theoretical models of the political incentives for government deficits, or of how fiscal institutions might affect fiscal outcomes. Other participants in the meeting reported new empirical findings on the links among budgeting rules, political circumstances, and fiscal outcomes in Europe, North and South America, and Australia. Finally, several research papers presented case studies of the effects of budget rules in particular countries, notably Australia, Canada, and Japan, with emphasis on the link between these rules and fiscal deficits.

The papers presented at the conference, and the discussants who commented on these papers, were:

Alberto F. Alesina, NBER and Harvard University, and Roberto Perotti, Columbia University, "Budget Deficits and Budget Institutions"

Discussant: Robert P. Inman, NBER and University of Pennsylvania Oved Yosha, Tel Aviv University, and Bent Sorensen, Brown University, "International Risk Sharing and European Monetary Unification"

Discussant: Manfred Neumann, University of Brown

Roberto Perotti, and Yianos Kontopoulos, Merrill Lynch, "Fragmented Fiscal Policy"

Discussant: Gian Maria Milesa-Ferretti, IMF

James M. Poterba, and Kim Rueben, Public Policy Institute of California, "State Fiscal Institutions and the U.S. Municipal Bond Market

Discussant: Anne Case, NBER and Princeton

Andres Velasco, NBER and New York University, "A Model of Endogenous Fiscal Deficits and Delayed Fiscal Reforms"

Discussant: Henning Bohn, University of California, Santa Barbara

Thomas Courchene, Queens University, "Subnational Budgetary and Stabilization Policies in Canada and Australia"

Discussant: Bernhard Spahn, University of Frankfurt

Ernesto Stein, Ernesto Talvi, and Alejandro Grisanti, Inter-American Development Bank, "Institutional Arrangements and Fiscal Performance: The Latin American Experience"

Discussant: Andrew Samwick, NBER and Dartmouth

Mariano Tommasi, Universidad de San Andres, Mark Jones, Michigan State University and Pablo Sanguinetti, Universidad T. Di Tella, "Politics, Institutions, and...