A New Rule; The Swiss Debt Brake
The paper provides an international comparison and a comprehensive analysis of a new fiscal expenditure rule for the federal government in Switzerland. The proposed rule has two innovative features: it aims at a structurally balanced budget in the short-run by annually setting a cyclically adjusted expenditure ceiling, and it arrests the accumulation of public debt via corrections of future expenditure targets for past deviations from projected fiscal balances. The paper finds that the new rule is likely to reduce procyclical tendencies in fiscal policy and that its objectives are adequate in meeting long-run fiscal challenges arising from demographic changes.
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- Alberto Alesina & Roberto Perotti, 1997. "Fiscal Adjustments in OECD Countries: Composition and Macroeconomic Effects," IMF Staff Papers, Palgrave Macmillan, vol. 44(2), pages 210-248, June.
- Becker, Gary S & Tomes, Nigel, 1979. "An Equilibrium Theory of the Distribution of Income and Intergenerational Mobility," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1153-89, December.
- George Kopits & Steven A. Symansky, 1998. "Fiscal Policy Rules," IMF Occasional Papers 162, International Monetary Fund.
- Aiyagari, S. Rao & McGrattan, Ellen R., 1998.
"The optimum quantity of debt,"
Journal of Monetary Economics,
Elsevier, vol. 42(3), pages 447-469, October.
- Barro, Robert J, 1979.
"On the Determination of the Public Debt,"
Journal of Political Economy,
University of Chicago Press, vol. 87(5), pages 940-71, October.
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