02145cas a2200229 a 4500 AALejournalIMF021387 230101c9999 xx r poo 0 0eng d 5.00 USD 9781513563855 1018-5941 BD-DhAAL BD-DhAAL Individual Treatment Effects of Budget Balance Rules. Washington, D.C. : International Monetary Fund, 2020. 1 online resource (26 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper investigates the heterogenous effects of budget balance rules on fiscal policy in a large sample of countries. To derive country-specific treatment effects of fiscal rules and conduct inference, we use a Synthetic Difference-in-Differences Method. Our results indicate that countries with a budget balance rule improve their fiscal balance on average by around 3 percent after its introduction. However, our results also illustrate the importance of going beyond the average treatment effect, as it masks significant heterogeneity in the country-specific impact of the rule. We find that countries that would have had large deficits in the absence of the fiscal rule exhibit positive treatment effects, thus reducing their budget deficits. On the other hand, countries with budget surpluses respond to fiscal rules by reducing their budget surplus and moving closer to the numerical target of the rule. Our results also suggest that rules' design matters: a small overall number of fiscal rules, and the presence of a monitoring process outside the government, especially at the supra-national level, improve significantly the effectiveness of the rules. Mode of access: Internet IMF Working Papers; Working Paper ; No. 2020/274 Full text available on IMF http://elibrary.imf.org/view/journals/001/2020/274/001.2020.issue-274-en.xml IMF e-Library