Why don't we follow the rules? Drivers of compliance with fiscal policy rules in emerging markets

Under what conditions do countries comply with their fiscal policy rules? We tackle this question in the context of emerging countries, with a specific focus on Latin America and the Caribbean, a region where fiscal rules have become increasingly common in recent decades. Based on an original dataset of compliance behavior across 14 countries observed between 2000 and 2020, we first document that complying with fiscal rules makes a difference in terms of fiscal performance. We then show that compliance is affected by rule -specific features and the broader macroeconomic and politico -institutional environment. Our findings contribute to the literature by showing the relevant design features and pre -conditions that may foster or inhibit the successful implementation of rules -based fiscal frameworks in emerging markets.