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Journal Article

Permanent Budget Surpluses as a Fiscal Regime


Haffert,  Lukas
International Max Planck Research School on the Social and Political Constitution of the Economy, MPI for the Study of Societies, Max Planck Society;
Department of Political Science, University of Zurich, Switzerland;

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Haffert, L. (2019). Permanent Budget Surpluses as a Fiscal Regime. Socio-Economic Review, 17(4), 1043-1063. doi:10.1093/ser/mwx050.

Cite as: http://hdl.handle.net/21.11116/0000-0000-BB16-5
This article challenges the focus on budget deficits that permeates the literature on the comparative political economy of fiscal policy. It analyzes countries running budget surpluses and asks why some preserved these surpluses while others did not. Whereas several OECD members recorded surpluses for just a few years, balanced budgets became the norm in Australia, Canada, Denmark, Finland, New Zealand and Sweden in the late 1990s. The article compares both types of countries. Focusing on Canada and Sweden, it argues that a path-dependent shift in the balance of power among competing fiscal policy coalitions explains why surpluses persisted in one group of countries but not in the other. This reconfiguration of fiscal conflict was triggered by a deep fiscal crisis and an ensuing expenditure-led consolidation. It can be interpreted as creating a ‘surplus regime,’ in which fiscal policy became structured around the goals of balancing the budget and cutting taxes.