Carnot, N. (2014) “European Economy, Evaluating Fiscal Policy – A Rule of Thumb“, European Commission – Economic Papers 526, August.
This paper introduces a simple rule for appraising the economic soundness of fiscal policies. It connects fiscal policy to a long-run debt objective, taken as an anchor, while arbitraging symmetrically between this debt objective and output stabilisation. The rule offers a benchmark to assess the evolution of primary expenditure, net of the impact of discretionary revenue measures, taken as a proper operational target for annual fiscal policy. The properties and implications of this rule of thumb are analysed drawing on qualitative arguments and retrospective simulations.
Relevant posts:
- Böwer, U., Michou, V. & Ungerer, C. (2014) “European Economy: The Puzzle of the Missing Greek Exports“, Economic Papers 518, European Commission, June 2014.
- Turrini, A., Koltay, G., Pierini, F., Goffard, C. & Kiss, A. (2014) “European Economy: a Decade of Labour Market Reforms in the EU – Insights from the LABREF Database“, Economic Papers 522, European Commission – Economic and Financial Affairs, June.
- Natali, D. (2014) “Social developments report 2013: blueprint for a new European social agenda“, European Social Observatory (ESO), European Trade Union Institute (ETUI), 03 July.