Proceedings of the 32nd International Academic Conference, Geneva

NUMERICAL FISCAL RULES: FRAMEWORK OR BARRIER FOR PUBLIC POLICYMAKING?

JOANNA DZIAŁO , BEATA GUZIEJEWSKA

Abstract:

The paper aims to assess the role of fiscal rules in the process of consolidating public finances and maintaining macroeconomic stability in the EU Member States in the period of the economic crisis. Additionally, the paper presents the case study on the efficiency of fiscal rules at the self-government (local) level in Poland. The article puts forward the thesis that fiscal rules were not an effective instrument for ensuring fiscal discipline in times of crisis. It presents the most important issues of the process of evolution of the rules during the crisis. A review and an analysis of legislation and literature on reforms implemented in the area of fiscal rules, confirms this thesis. The paper points to the need to create such fiscal rules that could contribute not only to fiscal stability but also to macroeconomic stability of the economy and concludes with recommendations for the creation of effective fiscal rules and their desirable features. The rules should be based on the structural balance or the over the cycle balance (but, in order for such rules to be effective, the structural deficit should be relatively low). Effective enforcement of the rules is necessary as well as a strong legal basis for the rules.

Keywords: fiscal policy, fiscal rules, public debt, budget deficit

DOI: 10.20472/IAC.2017.032.011

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