Title: Flexible and standard fiscal rules in context of stability of public finances

Authors: Agnieszka Przybylska-Mazur

Addresses: Department of Statistical and Mathematical Methods in Economics, University of Economics in Katowice, ul. 1 Maja 50, 40-287 Katowice, Poland

Abstract: The main objectives of fiscal policy are to achieve balanced budget over the business cycle and to achieve the stability of public finances: general government debt and general government deficit. One way of fiscal decision making is decision based on the numerical rule. The basis of the analysis is debt brake rule - an example of the fiscal rule applied for the first time in Switzerland. Thus, the objective of this paper is to present of the modification of expenditure rule that is the core of debt brake rule and to take into account an exceptional circumstance in it. Making empirical analysis we compare the maximum expenditure levels calculated on the basis of a flexible and standard fiscal rules, general government deficit and debt. We present the results for one of the countries of the European Union - for Poland.

Keywords: fiscal rule; flexible fiscal rule; standard fiscal rule; exceptional circumstances; debt brake rule; general government deficit; general government debt; stability of public finances; Poland; maximum level of total expenditures; Maastricht criteria.

DOI: 10.1504/IJMEF.2020.109991

International Journal of Monetary Economics and Finance, 2020 Vol.13 No.4, pp.417 - 427

Received: 06 Dec 2019
Accepted: 05 Apr 2020
Published online: 30 Sep 2020 *

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