Advantages and Disadvantages of Fiscal Rules as Instruments of Anti-Cyclical Regulation of the Economy

Oksana Desyatnyuk and Taras Marshalok ()
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Oksana Desyatnyuk: Ternopil National Economic University, Ternopil, Ukraine
Taras Marshalok: Ternopil National Economic University, Ternopil, Ukraine

Oblik i finansi, 2019, issue 3, 71-81

Abstract: Today, the question of introducing state-of-the-art economic management technologies in Ukraine is very urgent, especially in the area of fiscal policy. Among all instruments of such policy, it is necessary to distinguish fiscal rules, which have positively proved themselves in foreign countries in the process of managing economic fluctuations, in overcoming economic crises and achieving sustainable economic growth. So, the study of the essence of such rules as the main tool for anti-cyclical regulation of the national economy, the peculiarities of their impact on the socio-economic situation of the country and the possibility of their introduction in Ukraine are urgent questions. The purpose of the article is to study the impact of fiscal rules on the economic situation in the country, as well as the definition of place of such tools in the system of counter-cyclical regulation of the economy and the feasibility of their implementation in fiscal practice of Ukraine. It was established that the introduction of fiscal rules is associated with economic fluctuations, economic crises that shocked the economies of the world during the twentieth century - beginning of the XXI century. It was found that the introduction of fiscal rules is preceded by strategic planning and forecasting of the economic development of the country, which should be based and include a set of indicative indicators necessary to achieve future goals, and not a spontaneous solution, which can lead to further aggravation economic and social situation. The fiscal rule is a multifaceted instrument that aims to achieve overall macroeconomic stabilization and economic equilibrium. The authors believe that fiscal rules are the psychological tool for the government to enforce fiscal policy discipline. In the socio-economic conditions of Ukraine, it will be advisable to introduce fiscal restrictions that will serve to shape discipline, transparency in the budget process, debt policy, government spending policy and tax policy. Transparent, predetermined parameters will lead to the formation of a positive investment climate, increase the level of confidence in the government, reduce the shadow economy, and increase the social standards of living.

Keywords: fiscal rules; fiscal policy; tax policy; expenditure policy; debt policy; anti-cyclical regulation of economy; GDP; government debt; government revenues; government expenditure; stabilization funds; budget deficit/surplus (search for similar items in EconPapers)
JEL-codes: G32 O23 (search for similar items in EconPapers)
Date: 2019
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