How to Calibrate Fiscal Rules: A Primer

IMF How To Notes, March 15, 2018

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How to Calibrate Fiscal Rules: A Primer

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Bibliographic details

• Authors: Luc Eyraud, Anja Baum, Andrew Hodge, Mariusz Jarmuzek, H. Elif Ture, Samba Mbaye, Young-Bae Kim
• Published: March 15, 2018
• Series: IMF How To Notes
• DOI: https://doi.org/10.5089/9781484337301.061

Overview and purpose

• Provides guidance on how to calibrate fiscal rules, defined as determining the thresholds (ceiling, floor, or target) for specific fiscal aggregates constrained by rules.
• Focuses on the calibration of the debt, balance, and expenditure rules.
• Positions this note as one of two guidance notes on the design of fiscal rules; the companion note focuses on rule selection.
• Emphasizes that rule selection and calibration are linked: if a fiscal framework had to be built from scratch, rules would need to be selected and calibrated at the same time.

Structure of the note

• Divided into four sections:
  • Section 1: General principles used to calibrate rules.
  • Section 2: International evidence on the numerical ceilings used in existing rules.
  • Section 3: Guidance on the calibration of the debt ceiling.
  • Section 4: Guidance on the calibration of operational rules (fiscal balance and expenditure rules).

Key substantive focus areas

• Debt rules:
  • Calibration guidance specific to setting a debt ceiling.
• Operational rules:
  • Calibration guidance for fiscal balance rules.
  • Calibration guidance for expenditure rules.
• International evidence:
  • Reports numerical ceilings used in existing rules across countries (details in section 2 of the note).

Authors, publication, and identifiers

• Authors: Luc Eyraud, Anja Baum, Andrew Hodge, Mariusz Jarmuzek, H. Elif Ture, Samba Mbaye, Young-Bae Kim
• Date: March 15, 2018
• Pages: 28
• Volume: 2018
• Issue: 002
• Series: How-To Note No 2018/002
• DOI: https://doi.org/10.5089/9781484337301.061
• Stock No: FADHTNEA2018002
• ISBN: 9781484337301
• ISSN: 2522-7912

Summary of guidance (from the note)

• Explains how to determine thresholds (ceiling, floor, or target) for fiscal aggregates constrained by rules.
• Focuses specifically on calibration of debt, balance, and expenditure rules.
• Presents general principles, international numerical evidence, and detailed guidance for debt ceilings and operational rules.

Source: How to Calibrate Fiscal Rules: A Primer (IMF How To Notes, March 15, 2018).

Content in this bundle

• Fiscal Policy: How to Calibrate Fiscal Rules, A Primer; How-to Note No. 8; March 2018
  • Fiscal Policy: How to Calibrate Fiscal Rules, A Primer; How-to Note No. 8; March 2018 (Markdown version)
  • Fiscal Policy: How to Calibrate Fiscal Rules, A Primer; How-to Note No. 8; March 2018 (PDF)