We propose a fiscal rule that fulfills a specific debt reduction objective while maintaining significant fiscal flexibility-two overarching concerns in Israel. Not unlike the Swiss ""debt brake,"" the rule incorporates an error-correction mechanism (ECM) through which departure from the debt...

Fiscal rules can help to counteract the deficits and spending biases that too often originate in the political process. Rules that constrain spending--rather than the balance--allow fiscal policy to be countercyclical. Yet the design of effective spending rules is by no means straightforward....

What are fiscal policy rules? What are the principal benefits and drawbacks associated with various fiscal rules, particularly compared with alternative approaches to fiscal adjustment? Can fiscal rules contribute to long-run sustainability and welfare without sacrificing short-run...

Evaluation of policy rules using empirical macroeconomic models is usually done on the assumption that the rules are perfectly credible. However, there are usually circumstances that cause the authorities to abandon any given rule. The public's expectations reflect this possibility. In the...

We propose a fiscal rule that fulfills a specific debt reduction objective while maintaining significant fiscal flexibility - two overarching concerns in Israel. Not unlike the Swiss quot;debt brake,quot; the rule incorporates an error-correction mechanism (ECM) through which departure from the...