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How to Calibrate Fiscal Rules: A Primer
Author:
Luc Eyraud
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Ms. Anja Baum https://isni.org/isni/0000000404811396 International Monetary Fund

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Andrew Hodge
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Mariusz Jarmuzek
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H. Elif Ture
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Samba Mbaye https://isni.org/isni/0000000404811396 International Monetary Fund

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Young-Bae Kim https://isni.org/isni/0000000404811396 International Monetary Fund

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Series:
IMF How To Notes
Volume/Issue:
Volume 2018: Issue 002
Language:
English
Publication Date:
15 Mar 2018
DOI:
https://doi.org/10.5089/9781484337301.061
ISBN:
9781484337301
ISSN:
2522-7912
Pages:
28
Keywords:
IMF multimedia service; publication order; publication service; debt rule ceiling; debt target; Fiscal stance; Debt limits; Fiscal rules; Global; Eastern Europe
Legal-disclaimer:
Fiscal Affairs Department (FAD) How to Notes offer practical advice from IMF staff members to policymakers on important fiscal issues. The views expressed in FAD How to Notes are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This note provides guidance on how to calibrate fiscal rules, that is, how to determine the thresholds (ceiling, floor, or target) for specific fiscal aggregates constrained by rules. The note focuses, more specifically, on the calibration of the debt, balance, and expenditure rules. The note is divided into four sections. The first section discusses general principles used to calibrate rules. The second section reports international evidence on the numerical ceilings used in existing rules. The third and fourth sections provide guidance on the calibration of the debt ceiling and the operational rules (fiscal balance and expenditure rules). This is one of two guidance notes on the design of fiscal rules; the other one focuses on rule selection. The two exercises are linked: if a fiscal framework had to be built from scratch, rules would need to be selected and calibrated at the same time.
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IMF How To Notes
ISSN:
2522-7912
Publisher:
International Monetary Fund