Abstract
Abstract. This paper aims to measure the effectiveness of fiscal rules. Fiscal rules are constraints on fiscal policy that limit budgetary outcomes. Some studies in the literature have examined their effectiveness using a stringency index. Arguing this index possesses some arbitrariness, this study measured the effectiveness of fiscal rules using cluster analysis. This cluster analysis resulted in dividing the data into two clusters. Using panel data of 26 Swiss cantons plus the Swiss federation over the period 1990 - 2012, a Least Squares Dummy Variable econometric model was conducted. The findings indicate that fiscal rules have a favorable effect. It was found that the frameworks of cantons in cluster 1 are more effective in decreasing cantonal deficits than those of cluster 2. Furthermore, it was found that cantons in cluster 1 have lower debt levels in comparison to cantons in cluster 2.
Keywords. Fiscal rules, Qualitative data analysis, Regional governments, Government spending.
JEL. C50, C80, H30, H50, H60, H70.References
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