Fiscal consolidation through fiscal rules?

Alexandra Adam and Silvia Elena Iacob
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Alexandra Adam: Bucharest University of Economic Studies
Silvia Elena Iacob: Bucharest University of Economic Studies

Theoretical and Applied Economics, 2014, vol. XXI, issue 2(591), 109-114

Abstract: Following the financial crisis, the budget deficits and public debt have recorded levels that no one would have considered a few years ago. Therefore, efforts are needed to achieve fiscal consolidation. Both in academic debates and policy many believe that fiscal rules should be the central element of a successful strategy, idea argued by the fact that a rule would restrict the discretionary actions of the government, thus strengthening the fiscal consolidation. However, there are differences when it comes to precisely specifying a rule. Therefore, in this article we want to analyze how much policy makers can rely on fiscal rules, factors necessary to achieve a high degree of effectiveness of fiscal rules, if a fiscal rule should be based on the budget balance level or the debt balance level and we will analyze whether the restrictions imposed ex-ante to the fiscal policy are superior to the ex-post penalties.

Keywords: fiscal consolidation; fiscal rules; credibility; budgetary deficit; public debt. (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:agr:journl:v:xxi:y:2014:i:2(591):p:109-114

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