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Notes on 'A Code for Fiscal Stability'


  • Buiter, Willem H.


This note comments on two central issues for fiscal policy design in the United Kingdom, highlighted in the recent ‘Code for Fiscal Stability’ proposed by the new Labour government. The first concerns the merits of the so-called ‘golden rule of public sector investment’ – the proposition that, over the cycle, government borrowing should not exceed government capital formation. The second concerns the case for attempting to construct a more comprehensive balance sheet of public sector assets and liabilities, including tangible public sector assets and certain contingent claims. The two main conclusions are that the golden rule is without merit but that, subject to some important caveats, the construction of a more comprehensive government balance sheet is a worthwhile enterprise.

Suggested Citation

  • Buiter, Willem H., 1998. "Notes on 'A Code for Fiscal Stability'," CEPR Discussion Papers 1831, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:1831

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    More about this item


    fiscal stability; golden rule; public sector balance sheet; public sector capital;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus


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