An Assessment of Fiscal Rules in the United Kingdom

Michael Kell

No 2001/091, IMF Working Papers from International Monetary Fund

Abstract: The paper assesses the United Kingdom's golden rule and debt rule against "ideal characteristics" of fiscal rules. It concludes that they are clearly defined; transparent in institutional arrangements and measurement; adequate to ensure sustainability; and strike a good balance between flexibility and enforceability. The rules could be strengthened by clarifying the benchmark embodied in the debt rule and the modalities of the "value for money" criterion for investment. Overall, the fiscal framework establishes the necessary preconditions for a credible fiscal policy, but the credibility of the rules could be undermined by the large gap between them and actual medium-term fiscal plans.

Keywords: WP; U.K. government; investment rule; government spending; fiscal rule; gross investment; monetary policy; Fiscal rules; fiscal sustainability; intergenerational equity; transparency; U.K. situation; U.K. case; nominal interest rate; U.K. rule; definition of sustainability; Capital spending; Current spending; Western Europe (search for similar items in EconPapers)
Pages: 36
Date: 2001-07-01
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Citations: View citations in EconPapers (15)

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