Evaluating Fiscal Policy: A Rule of Thumb

Author (Corporate)
Series Title
Series Details No.526, August 2014
Publication Date August 2014
ISBN 978-92-79-35175-4
ISSN 1725-3187
EC KC-AI-14-526-EN-N
Content Type ,

Abstract:
This paper introduces a simple rule for appraising the economic soundness of fiscal policies. It connects fiscal policy to a long-run debt objective, taken as an anchor, while arbitraging symmetrically between this debt objective and output stabilisation. The rule offers a benchmark to assess the evolution of primary expenditure, net of the impact of discretionary revenue measures, taken as a proper operational target for annual fiscal policy. The properties and implications of this rule of thumb are analysed drawing on qualitative arguments and retrospective simulations.

Source Link Link to Main Source http://dx.publications.europa.eu/10.2765/70540
Related Links
European Commission: DG Economic and Financial Affairs:European Economy: Economic Papers No.526, August 2014:Evaluating Fiscal Policy: A Rule of Thumb http://ec.europa.eu/economy_finance/publications/economic_paper/2014/ecp526_en.htm

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