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What is the Optimum Combination of Fiscal Rules?

“The debt trajectory is the core concern of the fiscal framework. Given the uncertainties surrounding the macroeconomic determinants of debt developments and also that these macroeconomic variables are beyond the control of the government, though they are endogenously affected by

The Merrifield Poulson (MP) Rules

The United States faces a considerable challenge to achieve fiscal consolidation. With debt in excess of $20 trillion, and a debt/GDP ratio in excess of 100%, the U.S. has emerged as one of the major debtor countries in the OECD.

Summary: An Alternative Fiscal Path

If the federal government had not abandoned the unwritten fiscal constitution of balanced budgets the debt could have been reduced, and perhaps eliminated over the past half century. Unfortunately the government has pursued Keynesian fiscal policies that are biased toward

Our survey of fiscal rules in OECD countries suggests that the most successful of these rules is the Swiss debt brake

The Swiss debt brake has enabled Switzerland to pursue a policy of fiscal consolidation to reduce deficits and achieve a sustainable fiscal policy. The Swiss debt brake imposes an expenditure limit that is cyclically adjusted based on the relationship between

How Should Fiscal Rules be designed to Achieve Debt Targets?

What is the Optimum Combination of Fiscal Rules? Bovet, J. J. Fournier, and A. Mourougane. 2016. “A Reassessment of Fiscal Space in OECD Countries’, OECD Working Paper no. 1352, Nov 23. Carnot, N. (2014), “Evaluating Fiscal Policy: A Rule of

Fiscal Rules for Economic Stability and Economic Growth

The success of new fiscal rules will depend upon their effectiveness in promoting economic stability and economic growth. There are several ways in which the proposed MP rule will promote these objectives, and the dynamic simulation model used in this

Fiscal Rule Guidelines

GUIDELINES FOR THE DESIGN OF NEW FISCAL RULES FOR THE U.S. In our book ‘Restoring America’s Fiscal Constitution’ (Merrifield and Poulson 2017) we make the case for a new set of fiscal rules to guide fiscal policy in the U.S.

Designing an Expenditure Rule for the U.S.

Expenditure Rules Emerge as the Anchor of a Sound Public Financial Management System The period since 1990 has witnessed a sharp increase in the number of fiscal rules at both the national and supranational level. Fiscal rules of course are

Designing a Deficit Debt Brake for the U.S.

The Debt Brake The proposed MP rule follows the Swiss precedent by imposing a brake on spending when debt approaches a debt tolerance level (Merrifield and Poulson 2016b, 2017). The debt tolerance level chosen in the European Union is 60%

A Topical Bibliography on Setting the Parameters for a Fiscal Stabilization Policy in the U.S.

Setting the Parameters for U.S. Fiscal Stabilization Policy What is the Rationale for New Fiscal Rules? Alesina and F. Giavazzi (eds.), Fiscal Policy after the Financial Crisis, NBER, The University of Chicago Press, Chicago. Persson, T., and G. Tabellini. 2000.