## Second-Generation Fiscal Rules: Balancing Simlicity, Flexibility, and Enforceability

_Staff Discussion Notes, April 13, 2018_

## Source details

**Canonical URL:** [Second-Generation Fiscal Rules: Balancing Simlicity, Flexibility, and Enforceability](https://www.imf.org/en/publications/staff-discussion-notes/issues/2018/04/12/second-generation-fiscal-rules-balancing-simplicity-flexibility-and-enforceability-45131)

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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

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### 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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## Content in this bundle

- **Staff Discussion Note**
  - [Staff Discussion Note (Markdown version)](/-/media/files/publications/sdn/2018/sdn1804-on-second-generation-fiscal-rules.pdf.md){rel="alternate" type="text/markdown"}
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- **Staff Discussion Note**
  - [Staff Discussion Note (Markdown version)](/-/media/files/publications/sdn/2018/sdn1804-technical-background-papers.pdf.md){rel="alternate" type="text/markdown"}
  - [Staff Discussion Note (PDF)](/-/media/files/publications/sdn/2018/sdn1804-technical-background-papers.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/staff-discussion-notes/issues/2018/04/12/second-generation-fiscal-rules-balancing-simplicity-flexibility-and-enforceability-45131_