Do National Numerical Fiscal Rules really shape fiscal behaviours in developing countries? A treatment effect evaluation

This paper analyses the effect of National Numerical Fiscal Rules (FRs) upon fiscal discipline in 74 developing countries over the period 1990–2007. It is the first study that assesses the impact of FRs on budgetary outcomes while controlling for the self-selection problem. It finds that the effect of FRs on structural fiscal balance is significantly positive, robust to a variety of alternative specifications, and varies with the type of FRs. It also finds that the treatment effect differs according to countries' characteristics: number of FRs, time length since FRs adoption, presence of supranational FRs, government fractionalisation and government stability.