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Ranking Fiscal Policy Rules: the Golden Rule of Public Finance vs. the Stability and Growth Pact

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  • Jérôme Creel

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

Abstract

The purpose of this note is to compare the characteristics of the actual Stability and Growth Pact with that of a European "modified golden rule". The latter would consist in achieving in each EU country a cyclically-adjusted net-of-public-investment balance. The benchmark for comparison is the classification adopted by Kopits and Symansky (1998) on "ideal fiscal rules". This classification has been used by Buti et al. (2003) in order to demonstrate the "ideal character" of the actual Stability and Growth Pact and thus legitimate only slight modifications to the Pact. I intend to show rather, that the "modified golden rule" is a better fiscal rule than the actual Pact.

Suggested Citation

  • Jérôme Creel, 2003. "Ranking Fiscal Policy Rules: the Golden Rule of Public Finance vs. the Stability and Growth Pact," SciencePo Working papers Main hal-00972778, HAL.
    • Handle: RePEc:hal:spmain:hal-00972778
    Note: View the original document on HAL open archive server: https://hal-sciencespo.archives-ouvertes.fr/hal-00972778
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    More about this item

    JEL classification:

    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General

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