Second-Generation Fiscal Rules: Balancing Simlicity, Flexibility, and Enforceability
Staff Discussion Notes, April 13, 2018
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Bibliographic details
- Authors: Luc Eyraud, Xavier Debrun, Andrew Hodge, Victor Duarte Lledo, Catherine A Pattillo
- Published: April 13, 2018
- Series: Staff Discussion Notes
- DOI: https://doi.org/10.5089/9781484350683.006
Overview and scope
- Title: Second-Generation Fiscal Rules: Balancing Simplicity, Flexibility, and Enforceability
- Authors: Luc Eyraud, Xavier Debrun, Andrew Hodge, Victor Duarte Lledo, Catherine A Pattillo
- Publication type: Staff Discussion Notes
- Date: April 13, 2018
- Series: Staff Discussion Notes No. 2018/004
- Issue: 004
- Volume: 2018
- Pages: 132
- DOI: https://doi.org/10.5089/9781484350683.006
- Stock No: SDNEA2018004
- ISBN: 9781484350683
- ISSN: 2617-6750
Key findings and diagnostic takeaways
- Fiscal rule frameworks have evolved significantly in response to the global financial crisis.
- Many countries have reformed existing fiscal rules or introduced new ones with the goals of:
- enhancing the credibility of fiscal policy, and
- providing a medium-term fiscal anchor.
- Enforcement and monitoring mechanisms have been upgraded in many jurisdictions.
- These innovations have increased the complexity of systems of rules, making them more complicated to operate.
- Despite reforms and upgraded enforcement/monitoring, compliance with fiscal rules has not improved.
Research contributions highlighted
- The SDN:
- takes stock of past experiences with fiscal rules,
- reviews recent reforms to fiscal rule frameworks, and
- presents new research on the effectiveness of rules.
Guiding principles and policy recommendations
- The SDN proposes guiding principles for future fiscal rule reforms to strike a better balance between:
- simplicity,
- flexibility, and
- enforceability.
Subject areas and keywords
- Subject: Fiscal policy, Public financial management (PFM)
- Keywords: balance rule, Budget planning and preparation, business cycle, debt, deficit bias, Europe, expenditure rule, fiscal governance, Fiscal policy, fiscal rule, fiscal rules, Fiscal stance, Global, rule adoption, rule effectiveness, SDN
Source: Staff Discussion Note "Second-Generation Fiscal Rules: Balancing Simplicity, Flexibility, and Enforceability" (April 13, 2018).
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- Staff Discussion Note
- Staff Discussion Note