Whereas the use of clear strategic frameworks for the conduct of monetary policy is already broadly accepted, this appears to be less so in the case for fiscal policy rules. Against this background, I should like to discuss today the benefits of fiscal rules compared with discretionary fiscal policies.
The rationale for fiscal policy rules When referring to fiscal rules, I mean a rule-based framework for the adoption of fiscal policy decisions. In practice, almost all such rules take the form of a medium-term target for the government budget balance, but the debt ratio is often also the subject of a fiscal rule.