Discutants: Christophe Blot et Florian Morvillier
Abstract : This paper contributes to the literature on fiscal policy and inflation. In particular, it estimates the effect of fiscal rules on inflation for a panel of 79 countries over the period from 1985 to 2021. To achieve this end, we use propensity score methods in order to deal with potential endogeneity issues. Our estimates show that the adoption of fiscal rules leads to a decline in inflation in the whole sample. Nevertheless when splitting according to different characteristics, we are unable to conclude for advanced countries and for countries whose central banks are not credible. These results are robust to different specifications.