Over the past half-cen\u00adtury, the adop\u00adti\u00adon of fis\u00adcal rules has beco\u00adme com\u00admon among both deve\u00adlo\u00adped and deve\u00adlo\u00adping eco\u00adno\u00admi\u00ades. Still, the focus in the lite\u00adra\u00adtu\u00adre has been on defi\u00adcit or balan\u00adced-bud\u00adget posi\u00adti\u00adons, whi\u00adle the poli\u00adti\u00adcal eco\u00adnomy of pri\u00admary sur\u00adplu\u00adses and the role of inco\u00adme dis\u00adtri\u00adbu\u00adti\u00adon in affec\u00adting growth and debt sta\u00adbi\u00adlity have lar\u00adgely been absent from the deba\u00adte. This arti\u00adcle argues that fis\u00adcal policy is, fun\u00adda\u00admen\u00adtally, an ins\u00adtru\u00adment of class con\u00adflict, and that expen\u00addi\u00adtu\u00adres whi\u00adch gua\u00adran\u00adtee inco\u00adme redis\u00adtri\u00adbu\u00adti\u00adon can be com\u00adpa\u00adti\u00adble with debt sta\u00adbi\u00adlity. To for\u00adma\u00adli\u00adze this claim, we deve\u00adlop a neo-Kalec\u00adki\u00adan model that incor\u00adpo\u00adra\u00adtes a fis\u00adcal rule desig\u00adned to ensu\u00adre a govern\u00adment sur\u00adplus, along with sup\u00adply-side cons\u00adtraints. The model shows that, in the long run, the\u00adre are two pos\u00adsi\u00adble tra\u00adjec\u00adto\u00adri\u00ades for the debt-to-capi\u00adtal ratio, depen\u00adding on the strength of crow\u00adding-out effects asso\u00adci\u00ada\u00adted with public debt, the level of inco\u00adme dis\u00adtri\u00adbu\u00adti\u00adon, the size of the govern\u00adment sur\u00adplus and the inte\u00adrest rate. In both tra\u00adjec\u00adto\u00adri\u00ades, debt sta\u00adbi\u00adlity is pos\u00adsi\u00adble, mea\u00adning that the size of the sur\u00adplus and the par\u00adti\u00adcu\u00adlar arran\u00adge\u00adment of inco\u00adme dis\u00adtri\u00adbu\u00adti\u00adon pro\u00admo\u00adted are choi\u00adces of the govern\u00adment. A govern\u00adment pur\u00adsuing a redis\u00adtri\u00adbu\u00adti\u00adve fis\u00adcal policy to pro\u00admo\u00adte soci\u00adal chan\u00adge is not neces\u00adsa\u00adrily incom\u00adpa\u00adti\u00adble with long-run debt stability.<\/p>\n","protected":false},"excerpt":{"rendered":"
Over the past half-cen\u00ad\u00adtury, the adop\u00adti\u00adon of fis\u00adcal rules has beco\u00adme com\u00admon among both deve\u00adlo\u00adped and deve\u00adlo\u00adping eco\u00adno\u00admi\u00ades. Still, the focus in the lite\u00adra\u00adtu\u00adre has been on defi\u00adcit or balan\u00ad\u00adced-bud\u00ad\u00adget posi\u00adti\u00adons, whi\u00adle the poli\u00adti\u00adcal eco\u00adnomy of pri\u00admary sur\u00adplu\u00adses and the role of inco\u00adme dis\u00adtri\u00adbu\u00adti\u00adon in affec\u00adting growth and debt sta\u00adbi\u00adlity have lar\u00adgely been absent from [\u2026]<\/p>\n","protected":false},"template":"","tags":[],"made_publication_type":[78],"class_list":["post-3401","made_publication","type-made_publication","status-publish","hentry","made_publication_type-working-papers"],"acf":[],"yoast_head":"\n