Fiscal Policy RulesWhat are fiscal policy rules? What are the principal benefits and drawbacks associated with various fiscal rules, particularly compared with alternative approaches to fiscal adjustment? Can fiscal rules contribute to long-run sustainability and welfare without sacrificing short-run stabilization? If so, what characteristics of fiscal rules make this contribution most effective? And in what circumstances and contexts, if any should the IMF encourage its member countries to adopt fiscal rules? This paper seeks to identify sensible fiscal policy rules that can succeed, if chosen by a member country, as an alternative to descretionary fiscal rules. |
Other editions - View all
Common terms and phrases
Adam Bennett automatic stabilizers balanced-budget rule baseline simulation Bayoumi Bretton Woods system budget deficits Canada central bank central bank credit central bank financing CFA franc zone compliance constitutional amendment constraints context creative accounting credibility currency board arrangement cyclical debt ratio debt rule deficit ceiling deficit limit deficit target discretionary policies Economic enforced European exchange rate expenditure Federal fiscal adjustment Fiscal balance fiscal deficits fiscal discipline fiscal policy rules fiscal rules Germany government consumption Government debt government deficits Growth Pact IMF Working Paper implementation increase inflation International Monetary Fund investment Italy Japan Kopits Long-term interest rate Maastricht Treaty macroeconomic member countries ment MULTIMOD Netherlands nomic noncompliance one-off measures operation output variability percent of GDP percentage point policy credibility prohibition public debt reduce reform regime shocks social security Stability and Growth subnational sustained Switzerland Tax revenue tion tional transparency United variance variation Washington Zealand