Publication: Fiscal Rules in Times of Crisis
Date
2020-07-16
ISSN
Published
2020-07-16
Author(s)
Bandaogo, Mahama Samir
Abstract
As governments around the world struggle
to piece together the most effective fiscal response to
counter the economic and social impact of the COVID-19
outbreak, some are facing constraints imposed by fiscal
rules enacted in the past to ensure fiscal discipline. The
outbreak has revealedthe weaknesses and inappropriateness of
many existing fiscal rules, and authorities should take the
opportunity to strengthen their fiscal rules by adopting
features that make them more flexible, operational, and
enforceable. Research shows that the de facto strength and
credibility of the fiscal rule is what matters for fiscal
discipline, not the mere de jure existence of one. As
important as it is that fiscal rules include contingencies
to accommodate large and effective fiscal responses to
severe and unprecedented crises, it is also as important
that fiscal rules provide clear guidance for building up
savings in times of positive shocks.
Citation
“Bandaogo, Mahama Samir. 2020. Fiscal Rules in Times of Crisis; Fiscal Rules in Times of Crisis. Research and Policy Brief;No.. 36. © World Bank, Washington, DC. http://openknowledge.worldbank.org/handle/10986/34217 License: CC BY 3.0 IGO.”