Restoring Public Debt Sustainability: The Role of Independent Fiscal Institutions represents the first comprehensive survey of a new generation of independent fiscal institutions, established to promote transparency in public finances through real-time monitoring of the soundness of budgetary policymaking. The chapters, authored by heads of the institutions, as well as distinguished policy analysts and academics, explore the rationale and experience of these
fiscal watchdogs. Consequently, useful lessons and implications are drawn for the design and practical operation of such institutions. The timeliness of the volume is underscored by the potential role of fiscal watchdogs in containing the public debt crisis that has engulfed a number of countries. Indeed,
the recent proliferation of these institutions has been in response to the need for enhancing policy credibility of highly indebted governments in financial markets and, more generally, for strengthening the quality of economic governance.
The first part of the book deals with key analytical and institutional issues: the political environment, the scope and limits of these institutions, the delegation of monetary policymaking to an independent body, and the implications of rising public indebtedness. The second part contains case studies of institutions that, for the most part, were born as a result of domestic political developments. The third part presents the experience of institutions whose origins can be traced directly or
indirectly to an earlier or a recent financial crisis. The chapters are written from a multidisciplinary - economic, financial, political, legal - perspective, intended for academics, researchers, and practitioners alike.
George Kopits is a senior scholar at the Woodrow Wilson International Center for Scholars, and a member of the Portuguese Public Finance Council and of Peru's Commission on Reform of the Macro-Fiscal Framework. Recently, he chaired the OECD reference group on independent fiscal institutions. In the past, he served as the first chair of the Fiscal Council in Hungary and as a member of the Monetary Council, National Bank of Hungary. Previous positions included assistant director at the International Monetary Fund and financial economist at the U.S. Treasury Department. He has given technical advice to governments in Europe, Latin America, and Asia. He has held a number of visiting academic appointments (at Bocconi, Budapest, Cape Town, Johns Hopkins, Siena, and Vienna universities) and has published extensively on public policy issues. Currently, he is on the adjunct faculty of the Central European University.
Preface ; 1. Introduction and Overview ; PART I ANALYTICAL AND INSTITUTIONAL ISSUES ; 2. Politics and Independent Analysis ; 3. Scope and Limits of Independent Fiscal Institutions ; 4. Comparing the Delegation of Monetary and Fiscal Policy ; 5. Independent Fiscal Institutions in the Face of Rising Public Debt ; PART II EXPERIENCE OF INTERNALLY-DRIVEN INSTITUTIONS ; 6. United States: Pioneer in Fiscal Surveillance ; 7. Netherlands: Fostering Consensus on Fiscal Policy ; 8. Belgium: Promoting Fiscal Discipline in a Federal System ; 9. Canada: Oversight with Qualified Independence ; PART III EXPERIENCE AND OUTLOOK FOR CRISIS-DRIVEN INSTITUTIONS ; 10. Sweden: Watchdog with a Broad Remit ; 11. Hungary: A Short-Lived Fiscal Watchdog ; 12. United Kingdom: Fiscal Watchdog and Official Forecaster ; 13. Italy: What Role for an Independent Fiscal Institution?