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Do we need fiscal rules?

Author

Listed:
  • Catherine Mathieu

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

  • Henri Sterdyniak

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

Abstract

The public finances crisis has brought binding fiscal rules proposals back to the forefront. The paper analyses their justifications and specifications, either in a classical or in a Keynesian framework. In the recent period there is no evidence that public deficits were caused by fiscal indiscipline and induced too high interest rates; there is no evidence that economically relevant rules can be designed. The paper provides in analysis of fiscal rules implemented either at country level (like the UK golden rule), or at the EU level (the Stability and Growth Pact). The paper shows that fiscal rules did not work before and during the crisis. The paper discusses the EU project, the "New Fiscal Pact", which risks to paralyse fiscal policies and to prevent economic stabilisation. The priority today is not to strengthen public finance discipline but to question economic developments which make public deficits necessary to support output.

Suggested Citation

  • Catherine Mathieu & Henri Sterdyniak, 2012. "Do we need fiscal rules?," Post-Print hal-03397877, HAL.
    • Handle: RePEc:hal:journl:hal-03397877
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    Citations

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    Cited by:

    1. Catherine Mathieu & Henri Sterdyniak, 2013. "Can the new French economic policy be successful?," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 10(2), pages 175-192.
    2. Christophe Blot & Marion Cochard & Jérôme Creel & Bruno Ducoudré & Danielle Schweisguth & Xavier Timbeau, 2014. "Is There an Alternative Strategy for Reducing Public Debt by 2032?," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 61(1), pages 39-57, Februar.
    3. Gladys Awinpoak Abindaw Nabieu & Godfred Alufar Bokpin & Achampong Kofi Osei & Patrick Opoku Asuming, 2021. "Fiscal rules, fiscal performance and economic growth in Sub‐Saharan Africa," African Development Review, African Development Bank, vol. 33(4), pages 607-619, December.
    4. Catherine Mathieu & Henri Sterdyniak, 2019. "Euro Area Macroeconomics. Where Do We Stand 20 Years Later?," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(HS), pages 55-88.
    5. repec:spo:wpmain:info:hdl:2441/5gatfudi8d950o29nati6iv55f is not listed on IDEAS
    6. Kea BARET, 2023. "On the importance of statistical governance quality and accurate targets for fiscal rules’ performance," Working Papers of BETA 2023-40, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    7. repec:spo:wpmain:info:hdl:2441/299ncu2o1b92c9773ttpt45gsn is not listed on IDEAS
    8. Catherine Mathieu & Henri Sterdyniak, 2022. "Towards New Fiscal Rules in the Euro Area?," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 57(1), pages 16-20, January.
    9. IMK Düsseldorf & OFCE Paris & WIFO Wien, 2013. "Crisis continues to smoulder," IMK Report 80e-2013, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    10. Muhsin Ali & Karim Khan, 2020. "Volatility in Discretionary Public Spending and Economic Growth: A Cross Country Analysis," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 59(1), pages 45-68.
    11. Alice Nicole Sindzingre, 2016. "From an Eroding Model to Questioned Trade Relationships: The European Union and Sub-Saharan Africa," Insight on Africa, , vol. 8(2), pages 81-95, July.
    12. IMK Düsseldorf & OFCE Paris & WIFO Wien, 2013. "Die Krise schwelt weiter," IMK Report 80-2013, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.

    More about this item

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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