Fiscal rules and discretion in a world economy by Marina Halac and Pierre Yared
By: Halac, Marina
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Contributor(s): Yared, Pierre.
Material type: 
ArticlePublisher: 2018Subject(s): POLITICA FISCAL | DEFICIT PUBLICO | INTERES | TIPOS
In:
The American Economic Review v. 108, n. 8, August 2018, p. 2305-2334Summary: Governments are present-biased toward spending. Fiscal rules are deficit limits that trade off commitment to not overspend and flexibility to react to shocks. We compare coordinated rules, chosen jointly by a group of countries, to uncoordinated rules. If governments' present bias is small, coordinated rules are tighter than uncoordinated rules: individual countries do not internalize the redistributive effect of interest rates. However, if the bias is large, coordinated rules are slacker: countries do not internalize the disciplining effect of interest rates. Surplus limits enhance welfare, and increased savings by some countries or outside economies can hurt the rest.
| Item type | Current location | Home library | Call number | Status | Date due | Barcode |
|---|---|---|---|---|---|---|
| Artículos | IEF | IEF | OP 234/2018/8-1 (Browse shelf) | Available | OP 234/2018/8-1 |
Disponible también en formato electrónico a través de la Biblioteca del IEF.
Resumen.
Bibliografía.
Governments are present-biased toward spending. Fiscal rules are deficit limits that trade off commitment to not overspend and flexibility to react to shocks. We compare coordinated rules, chosen jointly by a group of countries, to uncoordinated rules. If governments' present bias is small, coordinated rules are tighter than uncoordinated rules: individual countries do not internalize the redistributive effect of interest rates. However, if the bias is large, coordinated rules are slacker: countries do not internalize the disciplining effect of interest rates. Surplus limits enhance welfare, and increased savings by some countries or outside economies can hurt the rest.
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