IDEAS home Printed from https://ideas.repec.org/p/imf/imfwpa/2002-018.html
   My bibliography  Save this paper

A New Rule: The Swiss Debt Brake

Author

Listed:
  • Mr. Stephan Danninger

Abstract

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.

Suggested Citation

  • Mr. Stephan Danninger, 2002. "A New Rule: The Swiss Debt Brake," IMF Working Papers 2002/018, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:2002/018
    as

    Download full text from publisher

    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=15577
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Aiyagari, S. Rao & McGrattan, Ellen R., 1998. "The optimum quantity of debt," Journal of Monetary Economics, Elsevier, vol. 42(3), pages 447-469, October.
    2. 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.
    3. Barro, Robert J, 1979. "On the Determination of the Public Debt," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 940-971, October.
    4. Mr. George Kopits & Mr. Steven A. Symansky, 1998. "Fiscal Policy Rules," IMF Occasional Papers 1998/011, International Monetary Fund.
    5. 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 1153-1189, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lars P. Feld, 2010. "Sinnhaftigkeit und Effektivität der deutschen Schuldenbremse," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 11(3), pages 226-245, August.
    2. Santiago Lago-Peñas & Jorge Martinez-Vazquez & Agnese Sacchi, 2020. "Fiscal stability during the Great Recession: putting decentralization design to the test," Regional Studies, Taylor & Francis Journals, vol. 54(7), pages 919-930, July.
    3. Christian F. Pfeil & Lars P. Feld, 2024. "Does the Swiss Debt Brake Induce Sound Federal Finances? A Synthetic Control Analysis," Public Finance Review, , vol. 52(1), pages 3-41, January.
    4. David Prušvic, 2010. "Evropská fiskální pravidla a jejich účinnost: prvních 15 let [European Fiscal Policy Rules: First 15 Years]," Politická ekonomie, Prague University of Economics and Business, vol. 2010(1), pages 51-69.
    5. Feld Lars P. & Reuter Wolf Heinrich & Yeter Mustafa, 2019. "Öffentliche Investitionen: Die Schuldenbremse ist nicht das Problem," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 20(4), pages 292-303, December.
    6. Eric M. Leeper, 2016. "Should Central Banks Care About Fiscal Rules?," NBER Working Papers 22800, National Bureau of Economic Research, Inc.
    7. Schaltegger, Christoph A. & Feld, Lars P., 2009. "Do large cabinets favor large governments? Evidence on the fiscal commons problem for Swiss Cantons," Journal of Public Economics, Elsevier, vol. 93(1-2), pages 35-47, February.
    8. Asatryan, Zareh & Castellón, César & Stratmann, Thomas, 2018. "Balanced budget rules and fiscal outcomes: Evidence from historical constitutions," Journal of Public Economics, Elsevier, vol. 167(C), pages 105-119.
    9. Berthold Norbert & Koch Daniel, 2008. "Von der (Un-)Möglichkeit ausgeglichener Haushalte / The Impossibility of balanced budgets," ORDO. Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft, De Gruyter, vol. 59(1), pages 39-62, January.
    10. International Monetary Fund, 2010. "United Kingdom: Selected Issues Paper," IMF Staff Country Reports 2010/337, International Monetary Fund.
    11. Lars P. Feld & Christoph A. Schaltegger, 2004. "Do Large Cabinets Favor Large Governments? Evidence from Swiss Sub-federal Jurisdictions," Marburg Working Papers on Economics 200421, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    12. Mr. Erik J. Lundback, 2008. "Medium-Term Budgetary Frameworks - Lessons for Austria from International Experience," IMF Working Papers 2008/163, International Monetary Fund.
    13. Mr. Steven A. Symansky & Mr. Xavier Debrun & Mr. Natan P. Epstein, 2008. "A New Fiscal Rule: Should Israel “Go Swiss?”," IMF Working Papers 2008/087, International Monetary Fund.
    14. Krisztina Tóth, 2005. "The Impact of Legislature and Citizens on the Budgeting Process in Switzerland: Lessons for Central and Eastern Europe," FSES Working Papers 387, Faculty of Economics and Social Sciences, University of Freiburg/Fribourg Switzerland.
    15. Simon Luechinger & Christoph Schaltegger, 2013. "Fiscal rules, budget deficits and budget projections," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(5), pages 785-807, October.
    16. Tobias Beljean & Alain Geier, 2013. "The Swiss Debt Brake - Has It Been a Success?," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 149(II), pages 115-135, June.
    17. Christoph A. Schaltegger & Lars P. Feld, 2008. "Do Large Cabinets Favor Large Governments? Evidence on Institutional Restraints on the Fiscal Commons Problem for Swiss Cantons," CREMA Working Paper Series 2008-10, Center for Research in Economics, Management and the Arts (CREMA).
    18. International Monetary Fund, 2007. "Republic of Slovenia: Selected Issues," IMF Staff Country Reports 2007/182, International Monetary Fund.
    19. Hetschko, Clemens & Quint, Dominic & Thye, Marius, 2012. "Nationale Schuldenbremsen für die Länder der Europäischen Union: Taugt das deutsche Modell als Vorbild?," Discussion Papers 2012/12, Free University Berlin, School of Business & Economics.
    20. International Monetary Fund, 2008. "Israel: Selected Issues," IMF Staff Country Reports 2008/063, International Monetary Fund.
    21. Petia Topalova & Dan Nyberg, 2010. "What Level of Public Debt Could India Target?," IMF Working Papers 2010/007, International Monetary Fund.
    22. Eric Mayer & Nikolai Stähler, 2013. "The debt brake: business cycle and welfare consequences of Germany’s new fiscal policy rule," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 40(1), pages 39-74, February.
    23. Gebhard Kirchgässner & Silika Prohl, 2008. "Sustainability of Swiss Fiscal Policy," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 144(I), pages 57-83, March.
    24. Frank Bodmer, 2006. "The Swiss Debt Brake: How it Works and What Can Go Wrong," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 142(III), pages 307-330, September.
    25. Bai, Yuting & Leeper, Eric M., 2017. "Fiscal stabilization vs. passivity," Economics Letters, Elsevier, vol. 154(C), pages 105-108.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Szapáry, György & Orbán, Gábor, 2004. "A stabilitási és növekedési paktum az új tagállamok szemszögéből [The Stabilization and Growth Pact in the light of the new EU member-states]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(9), pages 810-831.
    2. Orban, Gabor & Szapary, Gyorgy, 2004. "The Stability and Growth Pact from the perspective of the new member states," Journal of Policy Modeling, Elsevier, vol. 26(7), pages 839-864, October.
    3. Viegas, Miguel & Ribeiro, Ana Paula, 2013. "The Dutch experience: Assessing the welfare impacts of two consolidation strategies using a heterogeneous-agent framework," Economic Modelling, Elsevier, vol. 32(C), pages 351-360.
    4. D’Erasmo, P. & Mendoza, E.G. & Zhang, J., 2016. "What is a Sustainable Public Debt?," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 2493-2597, Elsevier.
    5. Konstantakis, Konstantinos N. & Michaelides, Panayotis G., 2014. "Transmission of the debt crisis: From EU15 to USA or vice versa? A GVAR approach," Journal of Economics and Business, Elsevier, vol. 76(C), pages 115-132.
    6. Sean J. Gossel & Nicholas Biekpe, 2013. "The Cyclical Relationships Between South Africa's Net Capital Inflows and Fiscal and Monetary Policies," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 49(2), pages 64-83, March.
    7. Chien, YiLi & Wen, Yi, 2022. "The determination of public debt under both aggregate and idiosyncratic uncertainty," Journal of Economic Theory, Elsevier, vol. 203(C).
    8. Bartak, Jakub & Jabłoński, Łukasz & Tomkiewicz, Jacek, 2022. "Does income inequality explain public debt change in OECD countries?," International Review of Economics & Finance, Elsevier, vol. 80(C), pages 211-224.
    9. Azzimonti, Marina & Yared, Pierre, 2019. "The optimal public and private provision of safe assets," Journal of Monetary Economics, Elsevier, vol. 102(C), pages 126-144.
    10. Leonardo Martinez & Francisco Roch & Francisco Roldán & Jeromin Zettelmeyer, 2023. "Sovereign debt," Chapters, in: Refet S. Gürkaynak & Jonathan H. Wright (ed.), Research Handbook of Financial Markets, chapter 17, pages 378-405, Edward Elgar Publishing.
      • Leonardo Martinez & Francisco Roch & Francisco Roldan & Jeromin Zettelmeyer, 2022. "Sovereign Debt," Working Papers 167, Red Nacional de Investigadores en Economía (RedNIE).
      • Mr. Leonardo Martinez & Mr. Francisco Roch & Francisco Roldán & Mr. Jeromin Zettelmeyer, 2022. "Sovereign Debt," IMF Working Papers 2022/122, International Monetary Fund.
    11. repec:hal:spmain:info:hdl:2441/6bl2553ksc9vlq1fltjs9h1cht is not listed on IDEAS
    12. Buiter, Willem H. & Sibert, Anne C., 2016. "Government deficits in large open economies: The problem of too little public debt," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 10, pages 1-39.
    13. Rafal Benecki & Jens Hölscher & Mariusz Jarmuzek, 2006. "Fiscal Transparency and Policy Rules in Poland," CASE Network Studies and Analyses 0327, CASE-Center for Social and Economic Research.
    14. William B. Peterman & Erick Sager, 2022. "Optimal Public Debt with Life Cycle Motives," American Economic Journal: Macroeconomics, American Economic Association, vol. 14(4), pages 404-437, October.
    15. Martin Larch & Alessandro Turrini, 2011. "Received Wisdom And Beyond: Lessons From Fiscal Consolidation In The Eu," National Institute Economic Review, National Institute of Economic and Social Research, vol. 217(1), pages 1-18, July.
    16. Zsolt Darvas & György Szapáry, 2008. "Euro Area Enlargement and Euro Adoption Strategies," European Economy - Economic Papers 2008 - 2015 304, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    17. Eric M. Leeper, 2010. "Monetary science, fiscal alchemy," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 361-434.
    18. Rigobon, Roberto, 2002. "Disinflation and fiscal reform: a neoclassical perspective," Journal of International Economics, Elsevier, vol. 58(2), pages 265-297, December.
    19. Drudi, Francesco & Prati, Alessandro, 2000. "Signaling fiscal regime sustainability," European Economic Review, Elsevier, vol. 44(10), pages 1897-1930, December.
    20. Hideaki Tanaka, 2005. "Fiscal Rules and Targets and Public Expenditure Management: Enthusiasm in the 1990's and its Aftermath," Asia Pacific Economic Papers 346, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.
    21. Quadrini, Vincenzo & de Francisco, Eva & Azzimonti, Marina, 2012. "Financial Globalization, Inequality, and the Raising of Public Debt," CEPR Discussion Papers 8893, C.E.P.R. Discussion Papers.

    Corrections

    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:imf:imfwpa:2002/018. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Akshay Modi (email available below). General contact details of provider: https://edirc.repec.org/data/imfffus.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.