Staff Discussion Notes

The Return to Fiscal Rules

By Francesca Caselli, Hamid R Davoodi, Carlos Goncalves, Gee Hee Hong, Andresa Lagerborg, Paulo A Medas, Anh D. M. Nguyen, Jiae Yoo

October 11, 2022

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Francesca Caselli, Hamid R Davoodi, Carlos Goncalves, Gee Hee Hong, Andresa Lagerborg, Paulo A Medas, Anh D. M. Nguyen, and Jiae Yoo. The Return to Fiscal Rules, (USA: International Monetary Fund, 2022) accessed May 16, 2025

Disclaimer: This Staff Discussion Note represents the views of the authors and does not necessarily represent IMF views or IMF policy. The views expressed herein should be attributed to the authors and not to the IMF, its Executive Board, or its management. Staff Discussion Notes are published to elicit comments and to further debate.

Summary

Governments face difficult policy trade-offs with record debt levels, tightening monetary policies, and urgent demands, including food and energy crises, the climate agenda, and population aging. Governments need to communicate fiscal plans to reduce debt sustainability risks and promote consistent macroeconomic policies. Many envisage a return to fiscal rules that had been suspended during the pandemic to strengthen credibility. This situation offers an opportunity to rethink fiscal rules and determine how governments can make fiscal policy more agile, including in responding to crises, without undermining fiscal sustainability. A risk-based medium-term fiscal framework that combines standards, rules, and strengthened institutions would strike a better balance between flexibility and credibility.

Subject: Economic sectors, Financial crises, Fiscal policy, Public debt

Keywords: Countercyclical fiscal policy, Debt rule, Debt threshold, Debt vulnerability, Fiscal Anchors, Fiscal councils, Fiscal Credibility, Fiscal governance, Fiscal Limits, Fiscal Rules, Global, IMF Staff Discussion Note 2022/002, Independent Fiscal Institutions, Policy error, Public Debt Sustainability

Publication Details

  • Pages:

    36

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Staff Discussion Notes No. 2022/002

  • Stock No:

    SDNEA2022002

  • ISBN:

    9798400219467

  • ISSN:

    2617-6750

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