Fiscal Policy: Institutions versus Rules
University of Geneva - Graduate Institute of International Studies (HEI); Centre for Economic Policy Research (CEPR)
CEPR Discussion Paper No. 3238
The Paper explores how fiscal policy can be made both more disciplined and more counter-cyclical. It first examines whether the decline of public debts observed in the OECD area during the 1990s can be explained either by less activism or by a priority towards consolidation. It then argues that rules, for example the Stability and Growth Pact, are less likely to deliver the desired outcome than institutions. Drawing a parallel with monetary policy, it examines how a Fiscal Policy Committee could reproduce what Monetary Policy Committees have achieved in central banking.
Number of Pages in PDF File: 40
Keywords: Fiscal policy, discipline, cyclicality, rules and discretion, institutions
JEL Classification: D78, E32, E63, H60working papers series
Date posted: March 28, 2002
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