Rules-Based Fiscal Policy in France, Germany, Italy, and Spain
Occasional Papers, November 14, 2003
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Bibliographic details
- Authors: Teresa Daban Sanchez, Steven A. Symansky, Gian M Milesi-Ferretti, Enrica Detragiache, Gabriel Di Bella
- Published: November 14, 2003
- Series: Occasional Papers
- DOI: https://doi.org/10.5089/9781589062160.084
Summary and central findings
- Fiscal rules can help to counteract the deficits and spending biases that originate in the political process.
- Rules that constrain spending—rather than the balance—allow fiscal policy to be countercyclical.
- The design of effective spending rules is complex and raises several key questions on form, scope, and safeguards.
- France, Germany, Italy, and Spain are explored as case studies and could benefit from greater emphasis on fiscal rules to constrain spending.
Key design questions and analytical themes
- Should a rule be real or nominal?
- How comprehensive should the definition of spending be?
- What safeguards ensure the credibility of a rule?
- How do rules work in decentralized systems where regions and states are partially autonomous?
Policy implications and recommendations (implicit in analysis)
- Favor spending-based rules if the objective is to preserve countercyclicality in fiscal policy.
- Carefully define the coverage of spending measures to avoid loopholes and ensure policy effectiveness.
- Establish safeguards that enhance credibility (institutional arrangements, monitoring, enforcement mechanisms).
- Adapt rule design to account for decentralization and fiscal autonomy at regional/state levels.
Publication and document specifics
- Authors: Teresa Daban Sanchez, Steven A. Symansky, Gian M Milesi-Ferretti, Enrica Detragiache, Gabriel Di Bella
- Publication date: November 14, 2003
- Series: Occasional Paper No. 2003/009
- Issue: 009
- Volume: 2003
- Pages: 46
- DOI: https://doi.org/10.5089/9781589062160.084
- ISBN: 9781589062160
- ISSN: 0251-6365
- Subject keywords: Expenditure, Fiscal policy, Fiscal rules, Fiscal stance, Public debt
- Additional keywords: debt target, deficit, expenditure rule, fiscal policy measure, Fiscal rules, Fiscal stance, OP, private sector response, rule, spending, spending rule, Western Europe
Source: Rules-Based Fiscal Policy in France, Germany, Italy, and Spain, International Monetary Fund (Occasional Paper No. 2003/009).