Fiscal Policy Learning from Crisis: Comparative Analysis of the Baltic Countries

Abstract

The experience of a major crisis is often expected to lead to policy learning but the empirical evidence about this is limited. The goal of the paper is to explore comparatively whether the crisis of 2008–2010 has led to fiscal policy learning by civil servants in the three Baltic countries. Despite some differences in the crisis experience, the finance ministry officials in all three countries have identified the same lesson from the crisis: fiscal policy should be counter-cyclical and help to stabilize the economy. The paper also discusses how various factors have influenced policy learning, including the acknowledgment of failure, blame shifting, and analytical tractability.

Keywords:

• policy learning
• fiscal policy
• crisis
• policy bureaucracy
• comparative analysis

Notes

1. Indeed, even if policy actors have engaged in policy learning, the modified beliefs themselves do not necessarily guarantee that policy change will ensue (Elliott and Macpherson 2010; Fenger and Quaglia 2015). Also, even if policy change occurs, it may take place for other reasons than learning (e.g. electoral considerations, external pressures, resource constraints) (May 1992; Fenger and Quaglia 2015).

2. While several streams of literature related to policy learning (e.g. policy transfer, policy diffusion or lesson-drawing in public policy) focus on actual policy change, the focus of our paper is on ideational shifts rather than on whether the lessons are eventually translated into policy.

3. The structural position of the budget is calculated on the basis of a cyclically adjusted position, which is adjusted for one-off and temporary transactions. The cyclically adjusted budget position, in turn, is found by subtracting the cyclical component (or the output gap) from the nominal budget position (for a more detailed discussion, see, for example, Mourre et al. 2014).

Additional information

Funding

The research leading to these results has received funding from the Estonian Research Council Grant PUT-1142 and the Norwegian Financial Mechanism 2009‒2014 under project No EMP264.

Notes on contributors

Ringa Raudla

Ringa Raudla ([email protected]) is Professor of Public Finance and Governance at Ragnar Nurkse School of Innovation and Governance, Tallinn University of Technology, Estonia. Her main research interests are fiscal policy, public budgeting and public management reforms.

Vytautas Kuokštis ([email protected]) is Associate Professor at the Institute of International Relations and Political Science, Vilnius University, Lithuania. His research focuses on international and comparative political economy.

Aleksandrs Cepilovs

Aleksandrs Cepilovs ([email protected]) is a Junior Research Fellow at Ragnar Nurkse School of Innovation and Governance, Tallinn University of Technology, Estonia. His main research interests are innovation policy, policy transfer and comparative public policy.

Vytautas Kuokštis

Vytautas Kuokštis ([email protected]) is Associate Professor at the Institute of International Relations and Political Science, Vilnius University, Lithuania. His research focuses on international and comparative political economy.

Rainer Kattel

Rainer Kattel ([email protected]) is Estonian Academy of Sciences Research Professor at Ragnar Nurkse School of Innovation and Governance, Tallinn University of Technology, Estonia. He has published extensively on the innovation policy and its governance.