Evaluating Fiscal Policy: A Rule of Thumb

Nicolas Carnot

No 526, European Economy - Economic Papers 2008 - 2015 from Directorate General Economic and Financial Affairs (DG ECFIN), European Commission

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.

JEL-codes: E62 H60 H77 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2014-08
New Economics Papers: this item is included in nep-mac and nep-pbe
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Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:euf:ecopap:0526

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