1 Overview of Fiscal Policy Rules in Emerging Markets


In the past decade, several advanced economies have shifted from discretion-based to rules-based fiscal policies. This shift has taken place in countries such as New Zealand, Australia, and the United Kingdom, but perhaps most visibly in the European Union (EU) in support of monetary unification.2 Thus, experience with fiscal policy rules, in the context of Europe’s economic and monetary union (EMU), has been the object of extensive analysis.3 Also, there has been considerable research on the effects of much older subnational rules in the United States.4