The Return to Fiscal Rules

Staff Discussion Notes, October 11, 2022

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The Return to Fiscal Rules

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Bibliographic details

• Authors: Francesca Caselli, Hamid R Davoodi, Carlos Goncalves, Gee Hee Hong, Paulo A Medas, Anh D. M. Nguyen, Jiae Yoo
• Published: October 11, 2022
• Series: Staff Discussion Notes
• DOI: https://doi.org/10.5089/9798400219467.006

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.

Key themes and concepts

• Fiscal Anchors
• Fiscal councils
• Fiscal Credibility
• Fiscal governance
• Fiscal Limits
• Fiscal Rules
• countercyclical fiscal policy
• debt rule
• debt threshold
• debt vulnerability
• Independent Fiscal Institutions
• policy error
• Public Debt Sustainability

Publication and authorship

• Title: The Return to Fiscal Rules
• By Francesca Caselli, Hamid R Davoodi, Carlos Goncalves, Gee Hee Hong, Paulo A Medas, Anh D. M. Nguyen, Jiae Yoo
• Date: October 11, 2022
• Series: Staff Discussion Notes No. 2022/002
• Issue: 002
• Volume: 2022
• Pages: 36
• DOI: https://doi.org/10.5089/9798400219467.006
• Stock No: SDNEA2022002
• ISBN: 9798400219467
• ISSN: 2617-6750
• 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

Staff Discussion Note — The Return to Fiscal Rules (Staff Discussion Notes 2022, 002).

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