A New Fiscal Rule: Should Israel “Go Swiss?”
Electronic Access:
Free Download. Use the free Adobe Acrobat Reader to view this PDF file
Summary:
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 objective affects binding medium-run expenditure ceilings. Two variants of our ECM rule are shown to be superior to a comparable deficit rule in terms of attaining the debt objective and allowing for fiscal stabilization while supporting medium-term expenditure planning. Given its relative sophistication, a proper implementation of the ECM rule requires supportive fiscal institutions, including independent input and assessment.
Series:
Working Paper No. 2008/087
Subject:
Budget planning and preparation Expenditure Fiscal policy Fiscal rules Public debt
English
Publication Date:
April 1, 2008
ISBN/ISSN:
9781451869484/1018-5941
Stock No:
WPIEA2008087
Pages:
27
Please address any questions about this title to publications@imf.org