Taylor's Fiscal Rule: An Exit to the Stability and Growth Pact Dead-end?
Farvaque E., F. Huart and C. Vaneecloo (2006), “Taylor’s fiscal rule: An exit to the Growth and Stability Pact dead-end”, Acta Oeconomica, 56(3), 323-340.
Posted: 22 Apr 2020
Date Written: 2006
Abstract
This study applies Taylor's (2000) proposed fiscal rule to EU-15 countries. We show that such a simple, flexible and transparent fiscal rule, if applied to individual EMU countries, could improve the enforceability of the Stability and Growth Pact. This rule is used to compute the structural budget balance consistent with a total budget position in balance, given national specificities concerning automatic stabilisers and the output gap. It is thus designed for being consistent with both fiscal discipline and flexibility.
Keywords: fiscal policy rule, automatic stabilisers, EMU, Stability
JEL Classification: E62, E63, H62
Suggested Citation: Suggested Citation