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Fiscal Discipline and Rules for Controlling the Deficit: Some Unpleasant Keynesian Arithmetic

In this paper we argue that rules are desirable in the conduct of fiscal policy. Since the market does not constrain federal borrowing, policy-imposed constraints are necessary to maintain fiscal prudence. A simple rule such as the annually balanced budget is sufficient for fiscal prudence but is extremely pro-cyclical. We explore the problem of specifying a rule which maintains fiscal prudence and permits counter-cyclical policy.
Year of publication:
1983
Authors: Bruce, Neil ; Purvis, Douglas D.
Institutions: Economics Department, Queen's University
Series:
Type of publication: Book / Working Paper
Notes:
2 pages long
Source:
Persistent link: https://www.econbiz.de/10005653040
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