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Evaluating Designs for a Fiscal Rule in Bulgaria


  • Jochen R. Andritzky


The enhanced Stability and Growth Pact calls on euro area members and aspirants to set boundaries to fiscal deficits through high-level legislation. A limit on the deficit, such as the deficit ceiling in Bulgaria's organic budget law, serves to protect solvency. The recent crisis clearly indicated that the key challenges are not only to contain the deficit but also to avoid a procyclical stance during upswings and to build a buffer for rainy days. Ideally, fiscal policymaking is guided by a fiscal rule that adapts through the economic cycle. This paper lays out the objectives of fiscal rules and analyzes how these objectives can be met in Bulgaria through either a growth-adjusted balance rule or an expenditure rule complemented by a deficit ceiling.

Suggested Citation

  • Jochen R. Andritzky, 2011. "Evaluating Designs for a Fiscal Rule in Bulgaria," IMF Working Papers 11/272, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:11/272

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    References listed on IDEAS

    1. Rogoff, Kenneth, 1990. "Equilibrium Political Budget Cycles," American Economic Review, American Economic Association, vol. 80(1), pages 21-36, March.
    2. Eric M. Leeper, 2010. "Monetary science, fiscal alchemy," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 361-434.
    3. Xavier Debrun & Laurent Moulin & Alessandro Turrini & Joaquim Ayuso-i-Casals & Manmohan S. Kumar, 2008. "Tied to the mast? National fiscal rules in the European Union," Economic Policy, CEPR;CES;MSH, vol. 23, pages 297-362, April.
    4. Xavier Debrun & Manmohan S. Kumar, 2007. "The Discipline-Enhancing Role of Fiscal Institutions; Theory and Empirical Evidence," IMF Working Papers 07/171, International Monetary Fund.
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    Cited by:

    1. repec:clr:wugarc:y:2013:v:39i:1p:69 is not listed on IDEAS
    2. Alfred Sitz & Aneliya Adzhemova & Atanas Pekanov, 2013. "Bulgarien: wirtschaftspolitische Strategie und ökonomische Entwicklung seit der Öffnung," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 39(1), pages 69-85.
    3. World Bank, 2014. "Albania Public Finance Review : Part 1. Toward a Sustainable Fiscal Policy for Growth," World Bank Other Operational Studies 17279, The World Bank.

    More about this item


    Budget deficits; Bulgaria; Fiscal policy; Fiscal rules; expenditure; fiscal rule; expenditure growth;

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