ИСТИНА

According to the IMF definition, “a fiscal rule is a long-lasting constraint on fiscal policy through numerical limits on budgetary aggregates… aiming to ensure fiscal responsibility and debt sustainability”. On the one hand, using fiscal rules can make government spending procyclicality lower, but on the other hand, contractionary fiscal policy can reduce GDP growth as well. This paper analyzes the impact of fiscal rules’ introduction on both the GDP growth and the cyclicality of noninterest public spending for developed countries and emerging markets during 1995—2021 using the IMF Fiscal rules database. Some previous estimates do not consider either the changes of the fiscal procyclicality over time, or the variation in the rules’ adoption over the different countries. Thus, we implement an alternative two-step procedure. First, we use the time-varying measure of fiscal counter-cyclicality as an estimated coefficient between the cyclical part of non-interest public spending and the cyclical part of the GDP growth for each country. The cyclical components are obtained through the Hodrick-Prescott filter. The time-varying estimated coefficients become the dependent variable for the second step. Then, as the fiscal rules usage (as a binary treatment, 1 for using any type of national rule in this year, and 0 for none) has a staggered structure, we use the staggered-adoption difference-in-difference method to estimate the causal effect of the fiscal rules on the time-varying measure of fiscal counter-cyclicality. Both “usual” TWFE and the staggered adoption difference-in-differences methods show that having at least one FR at the national level reduces the procyclicality of spending. This result is robust. Unlikely TWFE estimates, we find it negative (ATT=-1,88), but insignificant (95% confidence interval is [-4,118; 0,431]) both as average for the whole panel and for different countries grouped by the year of adoption of the fiscal rule. Under correct estimation method, there is no dilemma between contr-cyclicality and GDP growth. Fiscal rules' adoption does not lead to the GDP growth slowdown.