Fiscal Rules

Fiscal rules, designed to act as a constraint on fiscal decision-making, have been increasingly adopted by national governments over recent decades. They do, however, receive mixed reviews as to their effectiveness. Mostly, they focus on debt and deficit, though some countries also look at other measures such as spending or revenue levels. This chapter looks briefly at the European Union and the UK cases, as well as continuing the New Zealand example. Consistent with the arguments in this book, the chapter also considers using net worth as the basis for a fiscal rule.