Restraining Yourself: Fiscal Rules and Stabilization

July 1, 1994

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Barry J. Eichengreen, and Tamim Bayoumi. Restraining Yourself: Fiscal Rules and Stabilization, (USA: International Monetary Fund, 1994) accessed October 6, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

State budgets in the United States played a significant macroeconomic role in the 1970s and 1980s, and the level of cyclical responsiveness was affected by the severity of statutory and constitutional fiscal restraints. Moving from no fiscal restraints to the most stringent restraints lowered the fiscal offset to income fluctuations by around 40 percent. Simulations indicate that a reduction in aggregate fiscal stabilizers of this size could lead to a significant increase in the variance of aggregate output.

Subject: Budget planning and preparation, Expenditure, Fiscal policy, Fiscal stabilization, Fiscal stance, Public financial management (PFM)

Keywords: Budget balance, Budget planning and preparation, Europe, Fiscal restraints, Fiscal stabilization, Fiscal stance, Government, Government balance, Government structure, Govt. deficit, Local government, Local government sector, State budget, State government, State government equation, WP

Publication Details

Pages:

24
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1994/082
Stock No:

WPIEA0821994
ISBN:

9781451954708
ISSN:

1018-5941

Notes

Also published in Staff Papers, Vol. 42, No. 1, March 1995.

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