2018 | 4(18) | 1 | 86-106
Article title

Side effects of fiscal rules: a case of Polish local self‑government

Title variants
Languages of publication
The trend towards decentralization of government activities has prompted an increased interest in sub-national fiscal rules. The paper investigates an ex ante adaptation to the modified subnational fiscal framework. Using a panel of 2,479 Polish municipalities in the years 2011-2013 the aim is to verify the existence of the side effect of the new debt repayment rule. The empirical results show that local government units for which the new rule would have been more demanding than the former generated higher revenues per capita from asset sales.
Physical description
  • Poznań University of Economics and Business, Faculty of Economics, Department of Public Finance, al. Niepodległości 10, 61-875 Poznań, Poland
  • Baldazzi, P., & Grembi, V. (2011). Fiscal rules and window dressing: The case of Italian municipalities. Giornale degli Economisti e Annali di Economia , 70(1), 97–122.
  • Benito, B., Bastida, F., & Vicente, C. (2013)., Creating room for manoeuvre: A strategy to generate political budget cycles under fiscal rules. Kyklos, 66(4), 467–496. doi: 10.1111/kykl.12032
  • Burret, H. T., & Feld, L. P. (2017a). (Un-)Intended Effects of Fiscal Rules. In press in European Journal of Political Economy. doi: 10.1016/j.ejpoleco.2017.06.002
  • Burret, H.T., & Feld, L.P. (2017b). Vertical effects of fiscal rules: the Swiss experience. In press in International Tax and Public Finance. doi: 10.1007/s10797-017-9467-y
  • Buti, M., Martins, J.N., & Turrini, A. (2007). From deficits to debt and back: Political incentives under numerical fiscal rules. CESifo Economic Studies, 53(1), 115–152. doi: 10.2139/ssrn.2005229
  • Central Statistical Office Local Data Bank. Retrieved from (retrieved July 2016).
  • Easterly, W. (1999). When is fiscal adjustment an illussion? Economic Policy, 28, 55–86.
  • Eyraud, L., & Gomez Sirera, R. (2015). Constraints on Subnational Fiscal Policy. In C. Cottarelli, M. Guerguil (Eds.), Designing a European fiscal union. Lessons from the experience of fiscal federations (pp. 90-132), New York: IMF & Routledge.
  • Filipiak, B., & Dylewski, M. (2013). Indywidualny wskaźnik zadłużenia jednostek samorządu terytorialnego – problemy dostosowawcze. Prace Naukowe Uniwersytetu Ekonomicznego we Wrocławiu, 306, 120–131.
  • Heinemann, F., Moessinger, M.D., & Yeter, M. (2017). Do fiscal rules constrain fiscal policy? A meta-regression-analysis. In press in European Journal of Political Economy. doi: 10.1016/j.ejpoleco.2017.03.008
  • Irwin, T.C. (2012). Accounting devices and fiscal illusions. IMF Staff Discussion Note,12(2). doi: 10.5089/9781475502640.006.
  • Kluza, K. (2015). Innowacje finansowe w jednostkach samorządu terytorialnego na skutek wejścia w życie art. 243 Ustawy o finansach publicznych. Studia Ekonomiczne. Zeszyty Naukowe Uniwersytetu Ekonomicznego w Katowicach, 238, 53–64.
  • Koen, V., & van den Noord, P. (2005). Fiscal gimmickry in Europe: One-off measures and creative accounting. OECD Economics Department Working Papers, 417. doi: 10.1787/237714513517
  • Krajowa Rada Regionalnych Izb Obrachunkowych. (2005, 2010, 2012-2014). Sprawozdanie z działalności regionalnych izb obrachunkowych i wykonania budżetu przez jednostki samorządu terytorialnego, Warszawa: Krajowa Rada Regionalnych Izb Obrachunkowych. Retrieved from
  • Krajowa Rada Regionalnych Izb Obrachunkowych. (2016). Niestandardowe instrumenty finansowania potrzeb budżetowych jednostek samorządu terytorialnego, Łódź: Regionalna Izba Obrachunkowa w Łodzi. Retrieved from
  • Act on Public Finance of 27 August 2009 (Journal of Laws No. 157, Item 1240 with amendments).
  • Luechinger, S, & Schaltegger, Ch.A. (2013). Fiscal rules, budget deficits and budget projections. International Tax and Public Finance, 20(5), 785–807. doi: 10.1007/s10797-012-9245-9
  • Melo, M.A., Pereira, C., & Souza, S. (2014). Why do some governments resort to ‘creative accounting’ but not Others? Fiscal governance in the Brazilian federation. International Political Science Review, 35(5). 595–612. doi: 10.1177/0192512114543160
  • Milesi-Ferretti, G.M. (2003). Good, bad or ugly? On the effects of fiscal rules with creative accounting. Journal of Public Economics, 88(1-2) 377–394. doi: 10.1016/s0047-2727(02)00076-2
  • Milesi-Ferretti, G.M, & Moriyama, K. (2004). Fiscal adjustment in EU countries: A balance sheet approach. IMF Working Paper, WP/04/143. doi: 10.2139/ssrn.2040730
  • Ministry of Finance database. Retrieved from (retrieved July 2016).
  • Ministerstwo Finansów. (2015) Strategia zarządzania długiem sektora finansów publicznych w latach 2016-2019, Warszawa: Ministerstwo Finansów. Retrieved from
  • Poterba, J.M., & Rueben, K.S. (2001). Fiscal news, state budget news, and tax-exempt bond yields. Journal of Urban Economics, 50(3), 537–562. doi: 10.1006/juec.2001.2233
  • Rodden, J.A, Eskeland, G.S., & Litvack, J. (Eds.) (2003). Fiscal decentralization and the challenge of hard budget constraints. Massachusetts : The MIT Press.
  • Sutherland, D., Price, R., & Joumard, I. (2006). Sub-central government fiscal rules. OECD Economic Studies, 2005(2), 141–181. doi: 10.1787/eco_studies-v2005-art13-en
  • Ter-Minassian T. (2007). Fiscal rules for subnational governments: Can they promote fiscal discipline? OECD Journal on Budgeting, 6(3), 1–11. doi: 10.1787/budget-v6-art17-en
  • Ter-Minassian, T. (2015). Promoting responsible and sustainable fiscal decentralization. In E. Ahmad, G. Brosio (Eds.), Handbook of Multilevel Finance (pp. 437–457), Cheltenham: Edward Elgar Publishing.
  • von Hagen, J., & Wollf, G.B. (2006). What do deficits tell us about debt? Empirical evidence on creative accounting with fiscal rules in the EU. Journal of Banking and Finance, 30(12), 3259–3279. doi: /10.1016/j.jbankfin.2006.05.011
  • Wójtowicz, K. (2013). Zalety i wady obowiązującego systemu limitowania deficytu i długu samorządowego w Polsce. Annales Universitatis Mariae Curie-Skłodowska. Sectio H. Oeconomia, 47(2),153–161.
Document Type
Publication order reference
YADDA identifier
JavaScript is turned off in your web browser. Turn it on to take full advantage of this site, then refresh the page.