Evaluating Designs for a Fiscal Rule in Bulgaria

The enhanced Stability and Growth Pact calls on euro area members and aspirants to set boundaries to fiscal deficits through high-level legislation. A limit on the deficit, such as the deficit ceiling in Bulgaria''s organic budget law, serves to protect solvency. The recent crisis clearly indicated that the key challenges are not only to contain the deficit but also to avoid a procyclical stance during upswings and to build a buffer for rainy days. Ideally, fiscal policymaking is guided by a fiscal rule that adapts through the economic cycle. This paper lays out the objectives of fiscal rules and analyzes how these objectives can be met in Bulgaria through either a growth-adjusted balance rule or an expenditure rule complemented by a deficit ceiling.
Publication date: November 2011
ISBN: 9781463925277
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Economics- Macroeconomics , Economics / General , International - Economics , expenditure , fiscal rule , fiscal policy , fiscal rules , expenditure growth , capital expenditures , expenditures , budget balance , fiscal stance , budget law , public debt , fiscal balance , expenditure ratio , national fiscal rules , fiscal deficits , fiscal framework , budget defi

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