Charles Byaruhanga, Mark Henstridge, and Louis Kasekende
- Published in print:
- 2009
- Published Online:
- February 2010
- ISBN:
- 9780199556229
- eISBN:
- 9780191721823
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199556229.003.0003
- Subject:
- Economics and Finance, Macro- and Monetary Economics, Development, Growth, and Environmental
This chapter identifies three phases in Uganda's transformation from a war‐torn economy into one that has sustained rapid growth and low inflation since 1992. There were two major reforms in the ...
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This chapter identifies three phases in Uganda's transformation from a war‐torn economy into one that has sustained rapid growth and low inflation since 1992. There were two major reforms in the early 1990s. First the parallel foreign exchange market was legalized in 1990. Following the merger of the finance and planning ministries in 1992, a sharp fiscal adjustment established fiscal discipline and reduced inflation to single figures. The second phase was one of unconventional macro policy for the rest of the 1990s. With little scope for monetary policy, low inflation was sustained largely by tight, short‐term fiscal control. In the 2000s, financial deepening and budget reforms have provided a foundation for a more orthodox mix of fiscal and monetary policy.Less
This chapter identifies three phases in Uganda's transformation from a war‐torn economy into one that has sustained rapid growth and low inflation since 1992. There were two major reforms in the early 1990s. First the parallel foreign exchange market was legalized in 1990. Following the merger of the finance and planning ministries in 1992, a sharp fiscal adjustment established fiscal discipline and reduced inflation to single figures. The second phase was one of unconventional macro policy for the rest of the 1990s. With little scope for monetary policy, low inflation was sustained largely by tight, short‐term fiscal control. In the 2000s, financial deepening and budget reforms have provided a foundation for a more orthodox mix of fiscal and monetary policy.
Alan Whitworth and Tim Williamson
- Published in print:
- 2009
- Published Online:
- February 2010
- ISBN:
- 9780199556229
- eISBN:
- 9780191721823
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199556229.003.0001
- Subject:
- Economics and Finance, Macro- and Monetary Economics, Development, Growth, and Environmental
This synthesis chapter draws out the main findings from the individual chapters. After much agonizing over the direction of economic policy, three fundamental reforms between 1990 and 1992 ...
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This synthesis chapter draws out the main findings from the individual chapters. After much agonizing over the direction of economic policy, three fundamental reforms between 1990 and 1992 —legalization of the parallel foreign exchange market, liberalization of coffee marketing, and the establishment of fiscal discipline — brought macroeconomic stability. Together with trade liberalization and privatization, Uganda was set on the road to a liberal, capitalist economy. Concern that growth was bypassing the poor led to a focus on poverty reduction between the mid 1990s and early 2000s. Measures such as decentralization, the Poverty Eradication Action Plan, the Medium Term Expenditure Framework, the Poverty Action Fund, and Sector Working Groups succeeded in attracting increased aid and channeling it into poverty reduction. Sound economic management and a clear commitment to poverty reduction together explain why Uganda was the first beneficiary of both HIPC debt relief and the shift from project aid to budget support. The resulting increase in public service delivery contributed to rapid poverty reduction. The pace of reform has eased since 2002. The chapter concludes by emphasizing the crucial importance of political support for successful economic reform.Less
This synthesis chapter draws out the main findings from the individual chapters. After much agonizing over the direction of economic policy, three fundamental reforms between 1990 and 1992 —legalization of the parallel foreign exchange market, liberalization of coffee marketing, and the establishment of fiscal discipline — brought macroeconomic stability. Together with trade liberalization and privatization, Uganda was set on the road to a liberal, capitalist economy. Concern that growth was bypassing the poor led to a focus on poverty reduction between the mid 1990s and early 2000s. Measures such as decentralization, the Poverty Eradication Action Plan, the Medium Term Expenditure Framework, the Poverty Action Fund, and Sector Working Groups succeeded in attracting increased aid and channeling it into poverty reduction. Sound economic management and a clear commitment to poverty reduction together explain why Uganda was the first beneficiary of both HIPC debt relief and the shift from project aid to budget support. The resulting increase in public service delivery contributed to rapid poverty reduction. The pace of reform has eased since 2002. The chapter concludes by emphasizing the crucial importance of political support for successful economic reform.
Charles Wyplosz
- Published in print:
- 2013
- Published Online:
- September 2013
- ISBN:
- 9780226018447
- eISBN:
- 9780226018584
- Item type:
- chapter
- Publisher:
- University of Chicago Press
- DOI:
- 10.7208/chicago/9780226018584.003.0013
- Subject:
- Economics and Finance, Macro- and Monetary Economics
This chapter examines fiscal numerical rules and fiscal institutions, and is organized as follows. Section 12.2 explains the theoretical foundations for fiscal rules and their empirical relevance, ...
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This chapter examines fiscal numerical rules and fiscal institutions, and is organized as follows. Section 12.2 explains the theoretical foundations for fiscal rules and their empirical relevance, while Section 12.3 presents the theory behind the need to adopt restraints on the budgetary process. Section 12.4 describes the various forms of rules. Section 12.5 considers a number of arrangements and draws policy implications, while Section 12.6 concludes. It is argued that fiscal rules and fiscal institutions are neither necessary nor sufficient to achieve fiscal discipline, yet they help. A commentary is also included at the end of the chapter.Less
This chapter examines fiscal numerical rules and fiscal institutions, and is organized as follows. Section 12.2 explains the theoretical foundations for fiscal rules and their empirical relevance, while Section 12.3 presents the theory behind the need to adopt restraints on the budgetary process. Section 12.4 describes the various forms of rules. Section 12.5 considers a number of arrangements and draws policy implications, while Section 12.6 concludes. It is argued that fiscal rules and fiscal institutions are neither necessary nor sufficient to achieve fiscal discipline, yet they help. A commentary is also included at the end of the chapter.
Emmanuel Tumusiime‐Mutebile
- Published in print:
- 2009
- Published Online:
- February 2010
- ISBN:
- 9780199556229
- eISBN:
- 9780191721823
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199556229.003.0002
- Subject:
- Economics and Finance, Macro- and Monetary Economics, Development, Growth, and Environmental
This chapter provides the institutional and political context for the technical reforms discussed in subsequent chapters. It summarizes the abortive attempts at reform of the Obote II government and ...
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This chapter provides the institutional and political context for the technical reforms discussed in subsequent chapters. It summarizes the abortive attempts at reform of the Obote II government and discusses changes made by the NRM to the economic institutions it inherited in 1986. The long, heated debate over the direction of economic policy was resolved with the merger of the finance and planning ministries and the establishment of fiscal discipline in 1992. The critical role of the President in key economic decisions such as fiscal discipline, the commitment to poverty reduction, and the sale of Uganda Commercial Bank is highlighted. The role of Parliament has increased with the restoration of democracy. The chapter also examines how the finance and planning ministry became one of the strongest in Africa.Less
This chapter provides the institutional and political context for the technical reforms discussed in subsequent chapters. It summarizes the abortive attempts at reform of the Obote II government and discusses changes made by the NRM to the economic institutions it inherited in 1986. The long, heated debate over the direction of economic policy was resolved with the merger of the finance and planning ministries and the establishment of fiscal discipline in 1992. The critical role of the President in key economic decisions such as fiscal discipline, the commitment to poverty reduction, and the sale of Uganda Commercial Bank is highlighted. The role of Parliament has increased with the restoration of democracy. The chapter also examines how the finance and planning ministry became one of the strongest in Africa.
Carlo Cottarelli, Philip Gerson, and Abdelhak Senhadji (eds)
- Published in print:
- 2014
- Published Online:
- September 2015
- ISBN:
- 9780262027182
- eISBN:
- 9780262324113
- Item type:
- book
- Publisher:
- The MIT Press
- DOI:
- 10.7551/mitpress/9780262027182.001.0001
- Subject:
- Economics and Finance, Macro- and Monetary Economics
Fiscal policy makers have faced an extraordinarily challenging environment over the last few years. At the outset of the global financial crisis, the International Monetary Fund (IMF) for the first ...
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Fiscal policy makers have faced an extraordinarily challenging environment over the last few years. At the outset of the global financial crisis, the International Monetary Fund (IMF) for the first time advocated a fiscal expansion across all countries able to afford it, a seeming departure from the long-held consensus among economists that monetary policy rather than fiscal policy was the appropriate response to fluctuations in economic activity. Since then, the IMF has emphasized that the speed of fiscal adjustment should be determined by the specific circumstances in each country. Its recommendation that deficit reduction proceed steadily, but gradually, positions the IMF between the fiscal doves (who argue for postponing fiscal adjustment altogether) and the fiscal hawks (who argue for a front-loaded adjustment). This volume brings together the analysis underpinning the IMF's position on the evolving role of fiscal policy. After establishing its analytical foundation, with chapters on such topics as fiscal risk and debt dynamics, the book analyzes the buildup of fiscal vulnerabilities before the crisis, presents the policy response during the crisis, discusses the fiscal outlook and policy challenges ahead, and offers lessons learned from the crisis and its aftermath. Topics discussed include a historical view of debt accumulation; the timing, size, and composition of fiscal stimulus packages in advanced and emerging economies; the heated debate surrounding the size of fiscal multipliers and the effectiveness of fiscal policy as a countercyclical tool; coordination of fiscal and monetary policies; the sovereign debt crisis in Europe; and institutional reform aimed at fostering fiscal discipline.Less
Fiscal policy makers have faced an extraordinarily challenging environment over the last few years. At the outset of the global financial crisis, the International Monetary Fund (IMF) for the first time advocated a fiscal expansion across all countries able to afford it, a seeming departure from the long-held consensus among economists that monetary policy rather than fiscal policy was the appropriate response to fluctuations in economic activity. Since then, the IMF has emphasized that the speed of fiscal adjustment should be determined by the specific circumstances in each country. Its recommendation that deficit reduction proceed steadily, but gradually, positions the IMF between the fiscal doves (who argue for postponing fiscal adjustment altogether) and the fiscal hawks (who argue for a front-loaded adjustment). This volume brings together the analysis underpinning the IMF's position on the evolving role of fiscal policy. After establishing its analytical foundation, with chapters on such topics as fiscal risk and debt dynamics, the book analyzes the buildup of fiscal vulnerabilities before the crisis, presents the policy response during the crisis, discusses the fiscal outlook and policy challenges ahead, and offers lessons learned from the crisis and its aftermath. Topics discussed include a historical view of debt accumulation; the timing, size, and composition of fiscal stimulus packages in advanced and emerging economies; the heated debate surrounding the size of fiscal multipliers and the effectiveness of fiscal policy as a countercyclical tool; coordination of fiscal and monetary policies; the sovereign debt crisis in Europe; and institutional reform aimed at fostering fiscal discipline.
Xavier Debrun and Andrea Schaechter
- Published in print:
- 2014
- Published Online:
- September 2015
- ISBN:
- 9780262027182
- eISBN:
- 9780262324113
- Item type:
- chapter
- Publisher:
- The MIT Press
- DOI:
- 10.7551/mitpress/9780262027182.003.0019
- Subject:
- Economics and Finance, Macro- and Monetary Economics
This chapter examines recent institutional reforms specifically aimed at fostering fiscal discipline and counter-cyclicality in the aftermath of the 2007 financial crisis. It begins with an overview ...
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This chapter examines recent institutional reforms specifically aimed at fostering fiscal discipline and counter-cyclicality in the aftermath of the 2007 financial crisis. It begins with an overview of fiscal institutions, especially in the European Union, before and during the crisis and their shortcomings in terms of fiscal governance. It then considers key aspects of recent institutional reforms related to numerical fiscal rules, nonpartisan fiscal agencies, and major public financial management features. The chapter argues that the mixed results obtained with fiscal policy rules in the run-up to the 2008 to 2009 crisis have favored the emergence of a new generation of institutions. For instance, fiscal rules are now designed to better respond to cyclical output movements and are equipped with explicit enforcement mechanisms. In addition, the growing number of independent fiscal councils signals countries' interest in other forms of legitimate constraints on fiscal discretion, involving better operation of checks and balances in the political system and greater awareness by the electorate. Finally, these new institutions are backed by public financial management reforms aimed at a stronger medium-term orientation of the budget.Less
This chapter examines recent institutional reforms specifically aimed at fostering fiscal discipline and counter-cyclicality in the aftermath of the 2007 financial crisis. It begins with an overview of fiscal institutions, especially in the European Union, before and during the crisis and their shortcomings in terms of fiscal governance. It then considers key aspects of recent institutional reforms related to numerical fiscal rules, nonpartisan fiscal agencies, and major public financial management features. The chapter argues that the mixed results obtained with fiscal policy rules in the run-up to the 2008 to 2009 crisis have favored the emergence of a new generation of institutions. For instance, fiscal rules are now designed to better respond to cyclical output movements and are equipped with explicit enforcement mechanisms. In addition, the growing number of independent fiscal councils signals countries' interest in other forms of legitimate constraints on fiscal discretion, involving better operation of checks and balances in the political system and greater awareness by the electorate. Finally, these new institutions are backed by public financial management reforms aimed at a stronger medium-term orientation of the budget.
Alicia Hinarejos
- Published in print:
- 2015
- Published Online:
- August 2015
- ISBN:
- 9780198714958
- eISBN:
- 9780191783128
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780198714958.003.0005
- Subject:
- Law, EU Law
The crisis showed that EMU was not dealing with certain challenges effectively. For EMU to be sustainable as a multilevel system of fiscal and economic governance, it needs to be able to address ...
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The crisis showed that EMU was not dealing with certain challenges effectively. For EMU to be sustainable as a multilevel system of fiscal and economic governance, it needs to be able to address certain challenges that all federal, multilevel, or fiscally decentralized systems face. This chapter identifies three such challenges: (1) enforcing fiscal discipline; (2) addressing structural asymmetries between different euro area economies; and (3) preventing and countering asymmetric shocks. This chapter analyses the evolution of the EU’s multilevel system of fiscal and economic governance, and the way in which this system has sought to (partially) address these three main obstacles, from the original design of EMU, to the crisis and its aftermath. The chapter shows that there has been a clear evolution in the underlying principles of EMU, or the way in which fiscal and economic integration has been pursued since the creation of EMU to the present day.Less
The crisis showed that EMU was not dealing with certain challenges effectively. For EMU to be sustainable as a multilevel system of fiscal and economic governance, it needs to be able to address certain challenges that all federal, multilevel, or fiscally decentralized systems face. This chapter identifies three such challenges: (1) enforcing fiscal discipline; (2) addressing structural asymmetries between different euro area economies; and (3) preventing and countering asymmetric shocks. This chapter analyses the evolution of the EU’s multilevel system of fiscal and economic governance, and the way in which this system has sought to (partially) address these three main obstacles, from the original design of EMU, to the crisis and its aftermath. The chapter shows that there has been a clear evolution in the underlying principles of EMU, or the way in which fiscal and economic integration has been pursued since the creation of EMU to the present day.
Jean Pisani-Ferry
- Published in print:
- 2014
- Published Online:
- May 2014
- ISBN:
- 9780199993338
- eISBN:
- 9780199346400
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199993338.003.0014
- Subject:
- Economics and Finance, Financial Economics
Shortly after Mario Draghi took office as president of the European Central Bank (ECB), he called for what he named a “fiscal compact”, a further step towards improving fiscal discipline in the euro ...
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Shortly after Mario Draghi took office as president of the European Central Bank (ECB), he called for what he named a “fiscal compact”, a further step towards improving fiscal discipline in the euro area. In response, the leaders of 25 European Union countries soon announced their intention to adopt a new fiscal treaty. This was not the first time that European policymakers had put the emphasis on fiscal discipline as a remedy to the crisis. In the aftermath of the global crisis, the United States and the euro area actually adopted two opposite strategies. In the United States, priority was given to private deleveraging, with bold support from the central bank. In contrast, the drive to consolidate was stronger in the euro area and monetary policy less supportive. Although there are several explanations to this, fundamentally, many in Europe genuinely believed that the euro crisis was essentially rooted in fiscal imprudence. Although it is hard to dispute that countries in the euro area must reverse the drift in public-debt ratios, to tighten aggressively when the economy is already in recession is a risky strategy. Too-early and too-aggressive tightening can result in dreary economic performances, disappointing budgetary outcomes, and public resistance to austerity – the opposite of the intended result. The backlash came in 2013, when austerity started being widely blamed for the continent’s woes.Less
Shortly after Mario Draghi took office as president of the European Central Bank (ECB), he called for what he named a “fiscal compact”, a further step towards improving fiscal discipline in the euro area. In response, the leaders of 25 European Union countries soon announced their intention to adopt a new fiscal treaty. This was not the first time that European policymakers had put the emphasis on fiscal discipline as a remedy to the crisis. In the aftermath of the global crisis, the United States and the euro area actually adopted two opposite strategies. In the United States, priority was given to private deleveraging, with bold support from the central bank. In contrast, the drive to consolidate was stronger in the euro area and monetary policy less supportive. Although there are several explanations to this, fundamentally, many in Europe genuinely believed that the euro crisis was essentially rooted in fiscal imprudence. Although it is hard to dispute that countries in the euro area must reverse the drift in public-debt ratios, to tighten aggressively when the economy is already in recession is a risky strategy. Too-early and too-aggressive tightening can result in dreary economic performances, disappointing budgetary outcomes, and public resistance to austerity – the opposite of the intended result. The backlash came in 2013, when austerity started being widely blamed for the continent’s woes.
David M. Primo
- Published in print:
- 2007
- Published Online:
- March 2013
- ISBN:
- 9780226682594
- eISBN:
- 9780226682617
- Item type:
- book
- Publisher:
- University of Chicago Press
- DOI:
- 10.7208/chicago/9780226682617.001.0001
- Subject:
- Political Science, American Politics
Government spending has increased dramatically in the United States since World War II despite the many rules intended to rein in the insatiable appetite for tax revenue most politicians seem to ...
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Government spending has increased dramatically in the United States since World War II despite the many rules intended to rein in the insatiable appetite for tax revenue most politicians seem to share. Drawing on examples from the federal and state governments, this book explains why these budget rules tend to fail, and proposes alternatives for imposing much-needed fiscal discipline on our legislators. One reason budget rules are ineffective, the author shows, is because politicians often create and preserve loopholes to protect programs that benefit their constituents. Another is that legislators must enforce their own provisions, an arrangement which is seriously compromised by their unwillingness to abide by rules that demand short-term sacrifices for the sake of long-term gain. Convinced that budget rules enacted through such a flawed legislative process are unlikely to work, the author ultimately calls for a careful debate over the advantages and drawbacks of a constitutional convention initiated by the states—a radical step that would bypass Congress to create a path toward change.Less
Government spending has increased dramatically in the United States since World War II despite the many rules intended to rein in the insatiable appetite for tax revenue most politicians seem to share. Drawing on examples from the federal and state governments, this book explains why these budget rules tend to fail, and proposes alternatives for imposing much-needed fiscal discipline on our legislators. One reason budget rules are ineffective, the author shows, is because politicians often create and preserve loopholes to protect programs that benefit their constituents. Another is that legislators must enforce their own provisions, an arrangement which is seriously compromised by their unwillingness to abide by rules that demand short-term sacrifices for the sake of long-term gain. Convinced that budget rules enacted through such a flawed legislative process are unlikely to work, the author ultimately calls for a careful debate over the advantages and drawbacks of a constitutional convention initiated by the states—a radical step that would bypass Congress to create a path toward change.
Turkuler Isiksel
- Published in print:
- 2016
- Published Online:
- August 2016
- ISBN:
- 9780198759072
- eISBN:
- 9780191819698
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780198759072.003.0008
- Subject:
- Law, EU Law
The conclusion takes stock of the EU’s constitutional architectonic in view of the ongoing tribulations of Economic and Monetary Union (EMU), and assesses the extent to which the EU can fulfill the ...
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The conclusion takes stock of the EU’s constitutional architectonic in view of the ongoing tribulations of Economic and Monetary Union (EMU), and assesses the extent to which the EU can fulfill the constitutional desiderata that have been ascribed to it. Since the onset of the financial and sovereign debt crisis, the debate concerning the adequacy of the EU’s mechanisms of democratic legitimation has been eclipsed by a crisis of technocratic competence. More broadly, however, the EU’s system of functional constitutionalism flags a general tension between alternate and occasionally conflicting conceptions of political legitimacy. Citizens of contemporary democracies face a fundamental choice between collective self-rule and technocracy. Far from being sui generis, the EU’s legitimation crisis reinvigorates one of the oldest challenges of political theory: whether government of and by the people is also the most effective use of public power for the people.Less
The conclusion takes stock of the EU’s constitutional architectonic in view of the ongoing tribulations of Economic and Monetary Union (EMU), and assesses the extent to which the EU can fulfill the constitutional desiderata that have been ascribed to it. Since the onset of the financial and sovereign debt crisis, the debate concerning the adequacy of the EU’s mechanisms of democratic legitimation has been eclipsed by a crisis of technocratic competence. More broadly, however, the EU’s system of functional constitutionalism flags a general tension between alternate and occasionally conflicting conceptions of political legitimacy. Citizens of contemporary democracies face a fundamental choice between collective self-rule and technocracy. Far from being sui generis, the EU’s legitimation crisis reinvigorates one of the oldest challenges of political theory: whether government of and by the people is also the most effective use of public power for the people.
Ashoka Mody
- Published in print:
- 2018
- Published Online:
- May 2018
- ISBN:
- 9780199351381
- eISBN:
- 9780190873721
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/oso/9780199351381.003.0011
- Subject:
- Economics and Finance, International, Macro- and Monetary Economics
This chapter describes two scenarios, the two possible ways in which the final act of the European project plays out. In the first scenario, European authorities remain confident that they have ...
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This chapter describes two scenarios, the two possible ways in which the final act of the European project plays out. In the first scenario, European authorities remain confident that they have essentially been on the right track and they continue to make modest course corrections, which they believe will ensure a brighter European future. However, the elusive and frustrating pursuit of deeper economic and financial integration causes more economic and political damage. Setbacks and crises recur to test the euro and its accompanying political vision. In the second scenario, the pro-European vision, European authorities recognize the important truth that “more Europe” will not solve Europe's most pressing economic and social problems. They dismantle the economically counterproductive and politically corrosive system of fiscal rules and rely more on financial markets to enforce fiscal discipline. Paradoxically, the euro survives, not because it adds value but because it becomes largely irrelevant.Less
This chapter describes two scenarios, the two possible ways in which the final act of the European project plays out. In the first scenario, European authorities remain confident that they have essentially been on the right track and they continue to make modest course corrections, which they believe will ensure a brighter European future. However, the elusive and frustrating pursuit of deeper economic and financial integration causes more economic and political damage. Setbacks and crises recur to test the euro and its accompanying political vision. In the second scenario, the pro-European vision, European authorities recognize the important truth that “more Europe” will not solve Europe's most pressing economic and social problems. They dismantle the economically counterproductive and politically corrosive system of fiscal rules and rely more on financial markets to enforce fiscal discipline. Paradoxically, the euro survives, not because it adds value but because it becomes largely irrelevant.
