IDEAS home Printed from
   My bibliography  Save this article

Macroeconomic policy: rules versus discretion


  • Garabed Minassian


This paper debates the foundations of the principles of macroeconomic policy. It traces through the development of the ideas forming the macroconomic policy and especially the cyclical transition from observance of firmly established rules to discretion and vice versa, to curbing freedom at formation of macroecnomic influences. Reasons are brought forward backing the advantages and disadvantages of discretion in comparison with the government based on strictly formulated rules. A special attention is given to the Bulgarian practices and tradition. A conclusion is drawn that the Bulgarian governing elite has not historically succeeded in taking advantage of the opportunities offered by the discretional government and as a rule has abused (consciously or unconsciously) the right of a greater governing freedom. On the contrary, when the macroeconomic government has had to observe concrete imperative restrictions the results have been predominantly positive. The Bulgarian practice confirms the theoretical result that the losses from badly conducted discretional macroeconomic policy on a national scale are much greater than the benefits from a possible well formulated and carried out policy. Resulting from the analysis, concrete suggestions are formulated, carrying the basic idea of abiding by clearly defined rules of fiscal policy and concentrating the efforts of the state on setting up and running relevant market institutions.

Suggested Citation

  • Garabed Minassian, 2002. "Macroeconomic policy: rules versus discretion," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 6, pages 3-30.
  • Handle: RePEc:bas:econth:y:2002:i:6:p:3-30

    Download full text from publisher

    File URL:
    Download Restriction: Fee access

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    1. G. A. Mackenzie, 1989. "Are All Summary Indicators of the Stance of Fiscal Policy Misleading?," IMF Staff Papers, Palgrave Macmillan, vol. 36(4), pages 743-770, December.
    2. Vito Tanzi & Howell H. Zee, 1997. "Fiscal Policy and Long-Run Growth," IMF Staff Papers, Palgrave Macmillan, vol. 44(2), pages 179-209, June.
    3. Leslie Lipschitz & Alex Mourmouras & Timothy D. Lane, 2002. "Capital Flows to Transition Economies; Master or Servant?," IMF Working Papers 02/11, International Monetary Fund.
    4. Frank Hahn & Robert Solow, 1997. "A Critical Essay on Modern Macroeconomic Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 026258154x, January.
    Full references (including those not matched with items on IDEAS)

    More about this item

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E66 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General Outlook and Conditions


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bas:econth:y:2002:i:6:p:3-30. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Diana Dimitrova). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.