Resumen
This paper studies fiscal rule compliance under uncertainty and irreversibility. I show that a broad class of fiscal rule designs contain a state space in which the government optimally complies with the rule in place, a compliance zone. Outside the compliance zone, the government exerts control on the path committed by the rule. I also show that the size of the rule’s compliance zone depends on two elements: first, how the rule copes with the uncertainty regarding the macro variable that underlies it; and second, how the fiscal spending path committed by the rule accommodates the demand for public goods.
Idioma original | Inglés |
---|---|
Páginas (desde-hasta) | 1661-1670 |
Número de páginas | 10 |
Publicación | Applied Economics Letters |
Volumen | 30 |
N.º | 12 |
DOI | |
Estado | Publicada - 2023 |
Publicado de forma externa | Sí |