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Do we need fiscal rules?

Catherine Mathieu () and Henri Sterdyniak ()

Sciences Po publications from Sciences Po

Abstract: The public finances crisis has brought binding fiscal rules proposals back to the forefront. The paper analyses their justifications and specifications, either in a classical or in a Keynesian framework. In the recent period there is no evidence that public deficits were caused by fiscal indiscipline and induced too high interest rates; there is no evidence that economically relevant rules can be designed. The paper provides an analysis of fiscal rules implemented either at country level (like the UK golden rule), or at the EU level (the Stability and Growth Pact). The paper shows that fiscal rules did not work before and during the crisis. The paper discusses the EU project, the “Fiscal Pact”, which risks to paralyse fiscal policies and to prevent economic stabilisation. The priority today is not to strengthen public finance discipline but to question economic developments which make public deficits necessary to support output.

Keywords: Fiscal policy; Fiscal rules (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe
Date: 2013-01
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Published in Revue de l'OFCE - Débats et politiques, 2013, pp.189-233

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Related works:
Journal Article: Do we need fiscal rules? (2013) Downloads
Working Paper: Do we need fiscal rules? (2013) Downloads
Working Paper: Do we need fiscal rules? (2012) Downloads
Working Paper: Do we need fiscal rules? (2012) Downloads
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