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Comments on: Why doesn’t NZ need a fiscal rule? http://www.tvhe.co.nz/2015/01/22/why-doesnt-nz-need-a-fiscal-rule/ The Visible Hand in Economics Thu, 22 Jan 2015 01:24:00 +0000 hourly 1 https://wordpress.org/?v=6.9.4 By: Eric Crampton http://www.tvhe.co.nz/2015/01/22/why-doesnt-nz-need-a-fiscal-rule/#comment-43716 Thu, 22 Jan 2015 01:24:00 +0000 http://www.tvhe.co.nz/?p=12492#comment-43716 In reply to jamesz.

No, but one could. If a new spending programme threatened long-term fiscal position, that’s totally a fiscal council kinda role.

]]> By: jamesz http://www.tvhe.co.nz/2015/01/22/why-doesnt-nz-need-a-fiscal-rule/#comment-43715 Wed, 21 Jan 2015 23:53:00 +0000 http://www.tvhe.co.nz/?p=12492#comment-43715 In reply to Eric Crampton.

Do many fiscal councils have the CBA role? As I understand it, most don’t have the resources and really just certify the assumptions used in departmental modelling work. I like the idea but it’s a bit like beefed-up RIA and there’s not a lot of evidence that has improved the quality of policy. I wish there was because it seems like such a good idea!

Asymmetric responses to pos/neg output gaps are definitely a problem in the UK, too. The question for me is how you force a government to confront the long-run fiscal effects when it makes policy. Should the BEFU and HYEFU include elements of the LTFO, for instance?

]]> By: Eric Crampton http://www.tvhe.co.nz/2015/01/22/why-doesnt-nz-need-a-fiscal-rule/#comment-43714 Wed, 21 Jan 2015 23:18:00 +0000 http://www.tvhe.co.nz/?p=12492#comment-43714 Main problem is there’s no clearinghouse that might undertake both cost-benefit assessment of substantial spending and regulatory measures, and rolling review of the stock of existing programmes. A fiscal council could serve that function. As it stands, we get spendups during good times with little consideration of long term fiscal effects.

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