By Xavier Debrun, Luc Eyraud, Andrew Hodge, Victor Lledo, Catherine Pattillo, Abdelhak Senhadji
April 13, 2018
Versions in Español (Spanish), Français (French), Português (Portuguese)
The national debt clock in New York City: a fiscal rule, like the debt ceiling, should not be set too low or too high. (photo: Frances M. Roberts/Newscom)
Rules to contain lavish government deficits are most effective if countries design them to be simple, flexible, and enforceable in the face of changing economic circumstances.
In new analysis, we look at fiscal rules in over 90 countries and, based on their experiences, find that the rules put in the place over the last three decades often were too complex, overly rigid, and difficult to enforce. (more…)