Promoting fiscal discipline

This publication first explores the role of discretion in fiscal policy, and the extent, consequences, and causes of procyclicality, particularly in good times. It then examines how a variety of institutional approaches--fiscal rules, fiscal responsibility laws, and fiscal agencies--can help improve fiscal discipline. While each of these approaches can play a useful role, the authors suggest that a strategy combining them is likely to be particularly beneficial. Although such a strategy requires political commitment and effective fiscal management, at the same time, the strategy itself can bolster political commitment by highlighting the restraints on government and raising the costs of failing to respect them.--Publisher's description.