Sustainability of Public Finances and Automatic Stabilisation Under a Rule of Budgetary Discipline

37 Pages Posted: 24 Apr 2003

See all articles by Jose M. Marin

Jose M. Marin

Universidad Carlos III de Madrid

Date Written: November 2002

Abstract

This paper addresses the question of how a fiscal rule of a general type can preserve the sustainability of public finances and provide automatic stabilisation, taking as given interest rates and price stability. This issue can be considered complementary to the analysis of monetary policy rules, whose targets are price stability and often also output stabilisation, assuming that fiscal policy guarantees the sustainability of public finances. Considering the institutional framework provided by the Stability and Growth Pact, the paper also draws some policy conclusions.

Keywords: Fiscal policy, sustainability of public finances, automatic stabilisation, fiscal policy rules, stability and growth pact

JEL Classification: E61, H62, H63

Suggested Citation

Marin, Jose M., Sustainability of Public Finances and Automatic Stabilisation Under a Rule of Budgetary Discipline (November 2002). ECB Working Paper No. 193. Available at SSRN: https://ssrn.com/abstract=358480

Jose M. Marin (Contact Author)

Universidad Carlos III de Madrid ( email )

CL. de Madrid 126
Madrid, Madrid 28903
Spain

HOME PAGE: http://www.josemarin.com

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