Marzo / abril 2018


Australia’s Fiscal Framework: Revisiting Options for a Fiscal Anchor
Allan Dizioli, Philippe Karam, Dirk Muir, and Siegfried Steinlein

Public spending in education and student’s performance in Colombia
Laura Heras Recuero and Eduardo Olaberría

The Reallocation of District-Level Spending and Natural Disasters: Evidence from Indonesia
Emmanuel Skoufias, Eric Strobl and Thomas Tveit



The International Journal of Public Budget, through the publication of diverse articles written by different authors from various countries around the world, strictly with disclosure purposes, aims at contributing to the discussion of the best practices in the field of public administration.

The present edition of the International Journal of Public Budget includes a paper titled Australia’s Fiscal Framework: Revisiting Options for a Fiscal Anchor, written by Allan Dizioli, Philippe Karam, Dirk Muir, and Siegfried Steinlein. The article revisits options for fiscal anchors in Australia against the backdrop of a medium-term budget balance anchor that has led to larger than expected upward drift in the net debt to GDP ratio since the end of the mining investment boom. The IMF’s G20MOD model is used to compare the budget balance anchor with a long-term debt anchor. Using model simulations evaluated against objective macro stabilization-debt control criteria under three likely scenarios for the Australian economy, the latter is found to perform at least as well as the former. The paper also considers the operationalization of a long-term debt anchor utilizing a combination of fiscal rules which includes expenditure restrictions and a flexible time horizon for convergence, aiming at encouraging countercyclical fiscal policy and minimizing the cost in terms of real GDP foregone in the medium term under fiscal consolidation.

Also included is Laura Heras Recuero and Eduardo Olaberría’s paper titled Public spending in education and student’s performance in Colombia, which investigates if higher public spending in education and better teacher qualifications are related to student’s performance, using data from Saber 11, a national standardized test conducted by Instituto Colombiano para la Evaluación de la Educación. The estimation exploits differences in both policy variables across regions and employs interactions to study if more investment in public education and higher teacher qualifications can help increase average performance and reduce the impact that socioeconomic factors, such as family income, have on student performance. The analysis proposes a model where student performance in Mathematics and Language are dependent not only on the variables of interest of this paper, but also on economic, social and cultural status, sex and age of students, and school characteristics. The results show that students’ characteristics and their environment, school features and departmental differences in the policy variables explain roughly 20% of the variation in education performance in Colombia, a relatively high percentage when compared to those found by other studies focusing on OECD countries and based on PISA. After controlling for students’ and school characteristics, the results show that in Colombia, public spending per student and teacher qualifications are positively related to better learning outcomes. For the first one, the results suggest that if all regions reach the level of spending per student of Bogota – the region with the highest spending – average math scores can increase by 3.8 to 4.3 points (around 8%), depending on the regions, with the highest improvement for low income students.

Finally, the paper entitled The Reallocation of District-Level Spending and Natural Disasters: Evidence from Indonesia, written by Emmanuel Skoufias, Eric Strobl and Thomas Tveit, summarizes the findings of the recent Inter-American Development Bank book Two to Tango: Public-Private Collaboration Productive Development Policies, based on case studies of 25 productive development policies (PDPs) in five countries and discusses an additional example from Peru. One finding that emerges from those studies is that governments could not make policy in isolation and needed private sector involvement at every phase of the policy process. It is also found that the private sector generally collaborated in the design and implementation of PDPs without attempting to manipulate or capture them. In contrast to previous views of PDPs as static and best undertaken in isolation by governments, successful PDPs involve a dynamic and interactive process with ample and continuous private sector participation.

Thus, the Public Budget International Association makes a valuable contribution to the discussion of modern aspects of public finances and budgeting.