The paper proposes a theoretical analysis illustrating some key policy trade-offs involved in the implementation of a rules-based fiscal framework reminiscent of the Stability and Growth Pact (SGP). The analysis offers some insights on the current debate about the SGP. Specifically, greater...

The paper analyzes some key policy trade-offs involved in the implementation of the Stability and Growth Pact. Greater ""procedural"" flexibility in the Pact''s implementation may improve welfare. Procedural flexibility designates the enforcer''s room to apply judgment on underlying policies and...

Xavier Debrun and Manmohan S. Kumar deal with the impact of institutions on fiscal discipline, first discussing the point in principle: (i) fiscal institutions can work as commitment devices (i.e. tie policymakers' hands); (ii) they can work as signalling devices (i.e. reduce the information...