Public Finance and Fiscal Policy in South Africa

This chapter explores the trajectory of post-apartheid fiscal policy, focusing on the growth, equity, and sustainability trends between 2009 and 2019. Buoyed by the commodity boom, the African National Congress governing party strengthened fiscal institutions, improving the credibility and solvency of fiscal policy in the first fourteen years after the democratic transition. The decade after the global financial crisis in 2008 saw declining potential growth rates, deteriorating terms of trade, the institutionalization of state capture during the Zuma administration until 2018, policy uncertainty, widespread electricity outages, and a burgeoning public-sector wage bill. Rising deficits, debt, and state-owned-enterprise contingent liabilities triggered austerity without genuine fiscal consolidation. The coronavirus pandemic amplified these unsustainable trends arising from deferred structural fiscal adjustment.

Rising to a Challenge? Ten Years of Parliamentary Accountability of the European Semester

As a result of the euro crisis, EU economic governance has been reformed and EU institutions have gained new competences regarding national budgets, with the European Semester (the annual cycle of economic surveillance of the member states) being the most prominent example. With the Commission and the Council being the main actors, and the European Parliament playing only a minor role, a debate about the democratic legitimacy of the Semester and the role of national parliaments (NPs) in this regard has unfolded. This thematic issue, therefore, addresses the question of how parliamentary accountability of the European Semester has evolved: Have NPs met the challenge by adapting to the new situation in a way that allows them to hold the executive accountable? While the contributions to this thematic issue show significant variation across NPs, overall they reveal a rather pessimistic picture: Despite several institutional innovations concerning the reforms of internal rules and procedures, the rise of independent fiscal institutions, inter-parliamentary cooperation, and hearings with the European Commissioners, NPs have remained rather weak actors in EU economic governance also ten years after the Semester’s introduction. Whether recent changes linked to the establishment of the Recovery and Resilience Facility introduced in response to the Covid-19 crisis will change the picture significantly remains to be examined.

Do Independent Fiscal Institutions Enhance Parliamentary Accountability in the Eurozone?

Independent fiscal institutions (IFIs) have been established or reformed in all eurozone countries following the reform of economic governance. As they are expected to counter the deficit bias of the governments and the information asymmetry of the legislatures and the public over the management of the budget, IFIs may support or even strengthen parliamentary accountability. This hypothesis is tested with regard to three IFIs, the Irish Fiscal Advisory Council, the Italian Parliamentary Budget Office, and the Spanish Independent Authority for Fiscal Responsibility. Although the economic context in which the IFIs were created was similar in the three eurozone countries, as was their mandate, these institutions have a rather different institutional positioning, being within the Parliament, in Italy; within the Executive, in Spain; and a stand-alone body in Ireland. This is likely to influence the IFIs’ contribution to parliamentary accountability, we hypothesize that the closer the position of an IFI and its contacts to the parliament, the stronger is the scrutiny of the executive on budgetary policies. The analysis of parliamentary questions, hearings, and of the activation of the ‘comply or explain’ procedures shows that, overall, the IFIs’ potential role to enhance parliamentary accountability has remained underexploited by the three legislatures, with no significant differences as for the institutional positioning of the IFI.

The Global Informal Workforce

The Global Informal Workforce is a fresh look at the informal economy around the world and its impact on the macroeconomy. The book covers interactions between the informal economy, labor and product markets, gender equality, fiscal institutions and outcomes, social protection, and financial inclusion. Informality is a widespread and persistent phenomenon that affects how fast economies can grow, develop, and provide decent economic opportunities for their populations. The COVID-19 pandemic has helped to uncover the vulnerabilities of the informal workforce.

Impact of fiscal institutions on public finances in the European Union: Review of evidence in the empirical literature

This paper examines the impact of budgetary institutions on public finances in the European Union on the basis of a critical survey of the relevant theoretical and empirical literature. In general, the authors find that fiscal institutions (namely fiscal rules) have successfully contributed to greater fiscal sustainability, reduced procyclicality of fiscal policies within the EU, and increased national ownership of fiscal rules by strengthening national fiscal frameworks. A fiscal reaction function was one of the widely used methods to determine the principal variables affecting fiscal outcomes. Some authors used cyclically-adjusted fiscal outcomes as the dependent variable representing the discretionary fiscal policy-making whereas others put emphasis on other fiscal outcomes. The samples of countries covered mostly the EU Member States, representing rather homogenous samples in the context of common EU fiscal framework. Institutional aspects used as independent variables differed significantly among authors and some could be added for future research. Based on the literature survey, several recommendations were made for fiscal policy-making.

School Capital Expenditure Rules and Distribution

We provide descriptive evidence on the level and within-state distribution of school capital expenditures over the past two decades. We relate these to the fiscal institutions governing capital funding across states. Within-state differences in capital expenditures between the highest-and lowest-income school districts fell considerably following the Great Recession. Spending declined in the highest-income districts, while state support for low-income districts remained stable. Suggestive evidence points to the importance of constraints on districts' ability to raise local funding and the structure of state support in explaining these differences and trends over time.