Zareh Asatryan

Balanced Budget Rules and Fiscal Outcomes

In a CESifo Working Paper (5893), Zareh Asatryan (joint with César Castellón and Thomas Stratmann) has studied the long-run fiscal consequences of balanced budget rules (BBR) that are enshrined in a country’s constitution. Using historical data going back to the 19th century and applying a difference-in-difference approach, the researchers find that the introduction of a constitutional BBR reduces government debt-to-GDP and expenditure-to-GDP ratios, on average, by around 11 and 3 percentage points, respectively. No evidence was found that BBRs also affect tax revenues. The analysis demonstrated that such rules reduce the probability of experiencing a debt crisis, and that the effective enforcement of BBRs can be conditional on the quality of democratic institutions.

Mr. Asatryan is an applied economist with research interests are public finance, political economics, and development economics. During his visit, he plans to research the ways that firms and individuals interact with tax systems, especially devoting attention to understanding the anatomy of behavior in high evasion contexts.

Zareh Asatryan is Deputy Head of ZEW’s Research Department “Corporate Taxation and Public Finance.” He holds a PhD in Economics from the University of Freiburg, an MSc in Economics and Management Science from Humboldt University of Berlin and a BSc in Applied Mathematics and Statistics from the State University of New York at Stony Brook. Currently he heads the Armenian Economic Association.