Fiscal Rules Introduction: An overview and selected open issues

Kešeljević Kešeljević; Aleksander Aristovnik

Aleksandar Kešeljević
Aleksander Aristovnik

Keywords: fiscal rules, fiscal policy, OECD, MDS

Abstract

Fiscal rule can be defined as a permanent restriction for fiscal policy, specified by an indicator of fiscal spending. Fiscal rules vary greatly in terms of their respecti- ve forms. Therefore, the key purpose of this paper is to provide an in-depth account of the problems and dilemmas appearing upon the introduction of different fis- cal rules. The five most common forms of fiscal rules are analyzed from the aspect of fiscal consolidation and economic stabilization. The authors describe the requirements for greater effectiveness of fiscal rules and discuss the reasons against their implementation. The final chapter includes a political-economic analysis of the tra- de-off between government credibility and flexibility in the fiscal policy, a review of different institutional frameworks, penalties and exemptions, and a reflection on what time can be deemed (un)suitable for introducing a fiscal rule.

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Author Biographies

Aleksandar Kešeljević

Faculty of Economics, University of Ljubljana, Slovenia
E-mail: saso.keseljevic@ef.uni-lj.si

Aleksandar Kešeljević received his PhD in 2004 from the Faculty of Economics in Ljubljana. He works as an assistant professor of economics at the University of Ljubljana, where he is a member of the Department of Economic Theory and Policy. He researches mainly in the field of institutional analysis.

Aleksander Aristovnik

Faculty of Administration, University of Ljubljana, Slovenia
E-mail: aleksander.aristovnik@fu.uni-lj.si

Aleksander Aristovnik received his PhD in 2006 at the Faculty of Economics in Ljubljana. He works as an associate professor of international economics at the Faculty of Administration, University of Ljubljana, where he is a member of the Department of Economics and Public Sector Management. Key areas of his research include international economics and international finance, European in- tegration processes, and public finance.

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