The Swiss Debt Brake Is Democratic, Strict, Transparent, and Binding. A Model to Follow?

Mosler Martin () and Christoph Schaltegger
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Mosler Martin: Institute for Swiss Economic Policy, University of Lucerne, Lucerne, Switzerland

The Economists' Voice, 2024, vol. 21, issue 1, 213-218

Abstract: The Swiss debt brake at the federal level was accepted in 2001 by a direct democratic referendum, where it received an overwhelming approval rate of almost 85 percent “yes” votes. The fiscal rule mandates that budgeted expenditures cannot exceed cyclically adjusted expected revenues, targeting gross debt while prohibiting new structural debt. Violations due to ordinary or extraordinary expenditures are transparently recorded in separate accounts, which must be balanced within three and six years, respectively. The federal rule is complemented by decentralized debt brakes at the cantonal level. Compared to a synthetic Switzerland without the federal debt brake, the fiscal rule did not decrease public investments, with the notable exception of military expenditure. Additionally, the accuracy of budget forecasts has improved, evidenced by reduced discrepancies between projected and actual revenues and expenditures.

Keywords: fiscal rule; debt brake; Switzerland; federal level (search for similar items in EconPapers)
JEL-codes: H63 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1515/ev-2024-0021

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