A comparison of German, Swiss and Polish fiscal rules using Monte Carlo simulations

The second chapter, written together with Michał Ramsza, explores fiscal rules that govern the fiscal policy in Switzerland, Germany and Poland. Using a Monte Carlo simulation, we generate artificial time series of GDP and government revenues that, together with government expenditures implied by the rules, create paths of public debt and deficits. It gives us a framework in which we compare the performance of various fiscal rules for stabilizing debt at low levels and for inducing anticyclical fiscal policy.