Manasse, Paolo - In: IMF Staff Papers 54 (2007) 3, pp. 455-473
The paper shows that common fiscal rules, such as a limit to the deficit-output ratio, induce an “escape clause”–type fiscal policy, similar to that studied for monetary policy by Flood and Isard (1988 and 1989) and Lohmann (1992): The government resorts to an active stabilization (for...