Making fiscal policy more stabilising in the next upturn: Challenges and policy options

Anne-Marie Brook

New Zealand Economic Papers, 2013, vol. 47, issue 1, 71-94

Abstract: While New Zealand's fiscal framework has been relatively successful overall, this paper suggests that it gives insufficient emphasis to macro stabilisation during upturns in the business cycle, especially once the debt target has been met. Options for making fiscal policy ‘more stabilising’ in future economic upturns include: revising the Public Finance Act so as to increase the importance that is placed on avoiding pro-cyclical fiscal policy; more focus on sticking to ex-ante spending plans; or a stabilisation fund to safeguard revenue windfalls until the following downturn. The potential role of an independent fiscal council is also touched upon.

Date: 2013
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DOI: 10.1080/00779954.2012.721691

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