FISCAL POLICY RULES: EVIDENCE FROM CHILEAN ECONOMY

Ryszard Piasecki and Erico Wulf B

Review of Business and Finance Studies, 2014, vol. 5, issue 2, 45-54

Abstract: This paper analyzes, structural budget surplus (SBS) rule evidence for the Chilean economy. We examine its effect on macroeconomic variables, such as credit worthiness, output volatility, policy effectiveness ,and welfare level gains over time due to economic growth. Thus, SBS becomes a public good with undeniable positive externalities which government authorities are called to provide. Moreover, countries depending upon commodities exports, must deal with the implications of associated prices increases and impact on expectations about spending; the risk of inflationary pressures; internal and external imbalances . Fiscal rules instead, provide a safety net for public income fluctuations, keeping stable cyclical adjusted spending , and saving the surplus due to higher public incomes.

Keywords: Rules; Budget Surplus; Policy Coordination (search for similar items in EconPapers)
JEL-codes: E62 H5 (search for similar items in EconPapers)
Date: 2014
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