Expenditure Rules: Effective Tools for Sound Fiscal Policy?

This paper provides new evidence on the effectiveness of expenditure rules. The analysis isbased on a unique dataset covering all countries with national and supranational fiscal rules,including 33 expenditure rules, between 1985 and 2013. It contributes to the existingliterature on fiscal rules in two main ways. First, it is the most comprehensive assessment ofcompliance with rules and of the potential role of expenditure rules, in particular regardinglong-term sustainability. Second, it analyzes whether expenditure rules are associated withchanges in public investment and its efficiency.