{
  "title": "A New Fiscal Rule: Should Israel “Go Swiss?”",
  "publication": "IMF Working Papers, April 1, 2008",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/31/a-new-fiscal-rule-should-israel-go-swiss-21855",
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  "summary": "We propose a fiscal rule that fulfills a specific debt reduction objective while maintaining significant fiscal flexibility-two overarching concerns in Israel.",
  "sections": [
    {
      "heading": "Summary",
      "content": "- Authors: Steven A. Symansky, Xavier Debrun, Natan P. Epstein\n- Date: April 1, 2008\n- Core proposal: A fiscal rule that fulfills a specific debt reduction objective while maintaining significant fiscal flexibility.\n- Conceptual inspiration: Not unlike the Swiss \"debt brake,\" the rule incorporates an error-correction mechanism (ECM) through which departure from the debt objective affects binding medium-run expenditure ceilings.\n- Comparative claim: Two variants of the ECM rule are shown to be superior to a comparable deficit rule in terms of attaining the debt objective and allowing for fiscal stabilization while supporting medium-term expenditure planning.\n- Implementation caveat: Given its relative sophistication, a proper implementation of the ECM rule requires supportive fiscal institutions, including independent input and assessment."
    },
    {
      "heading": "Proposed rule design and mechanics",
      "content": "- Error-correction mechanism (ECM):\n  - Departure from the debt objective directly affects binding medium-run expenditure ceilings.\n  - ECM provides an automatic, rule-based adjustment channel to steer debt toward the objective while preserving expenditure planning horizons.\n- Variants:\n  - Two ECM variants are developed and analyzed (variants are described conceptually in the paper).\n- Comparison framework:\n  - ECM variants are compared to a comparable deficit rule on the basis of debt attainment, fiscal stabilization, and support for medium-term expenditure planning."
    },
    {
      "heading": "Key findings and performance",
      "content": "- Superiority of ECM variants:\n  - Both ECM variants outperform a comparable deficit rule in:\n    - Attaining the specified debt reduction objective.\n    - Allowing fiscal stabilization (enabling countercyclical responses when appropriate).\n    - Supporting medium-term expenditure planning via binding medium-run expenditure ceilings linked to the debt gap.\n- Trade-offs and strengths:\n  - ECM retains significant fiscal flexibility relative to strict deficit targets.\n  - By embedding error correction into expenditure ceilings, ECM balances discipline and stabilization capacity."
    },
    {
      "heading": "Policy recommendations and institutional requirements",
      "content": "- Implementation prerequisites:\n  - Supportive fiscal institutions are required for effective implementation.\n  - Independent input and assessment are necessary to operationalize the ECM rule given its sophistication.\n- Policy implications:\n  - Adoption of an ECM-based rule can help Israel meet a specific debt objective without unduly constraining fiscal stabilization.\n  - Medium-run expenditure planning should be integrated with the ECM to ensure binding ceilings function as intended.\n\n---\n\n Content in this bundle\n\n- 1. Central Government: DRL Ceiling Versus Actual Deficits, 1992–2009\n  - 1. Central Government: DRL Ceiling Versus Actual Deficits, 1992–2009 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - 1. Central Government: DRL Ceiling Versus Actual Deficits, 1992–2009 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/a-new-fiscal-rule-should-israel-go-swiss-21855"
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    "Authors: Steven A. Symansky, Xavier Debrun, Natan P. Epstein",
    "Published: April 1, 2008",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451869484.001",
    "Authors: Steven A. Symansky, Xavier Debrun, Natan P. Epstein",
    "Date: April 1, 2008",
    "Core proposal: A fiscal rule that fulfills a specific debt reduction objective while maintaining significant fiscal flexibility.",
    "Conceptual inspiration: Not unlike the Swiss \"debt brake,\" the rule incorporates an error-correction mechanism (ECM) through which departure from the debt objective affects binding medium-run expenditure ceilings.",
    "Comparative claim: Two variants of the ECM rule are shown to be superior to a comparable deficit rule in terms of attaining the debt objective and allowing for fiscal stabilization while supporting medium-term expenditure planning.",
    "Implementation caveat: Given its relative sophistication, a proper implementation of the ECM rule requires supportive fiscal institutions, including independent input and assessment.",
    "Error-correction mechanism (ECM):",
    "Variants:",
    "Comparison framework:",
    "Superiority of ECM variants:",
    "Trade-offs and strengths:",
    "Implementation prerequisites:",
    "Policy implications:",
    "**1. Central Government: DRL Ceiling Versus Actual Deficits, 1992–2009**"
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      "title": "1. Central Government: DRL Ceiling Versus Actual Deficits, 1992–2009",
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