OECD Economic Policy Papers

2226-583X (online)
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The OECD Economic Policy Papers series is designed to make available selected studies on structural and macro-economic policy issues of current interest. The Papers are produced in the context of the work carried out on the two regular OECD titles, OECD Economic Outlook and Going for Growth.

Prudent debt targets and fiscal frameworks You or your institution have access to this content

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Falilou Fall1, Debra Bloch1, Jean-Marc Fournier, Peter Hoeller
Author Affiliations
  • 1: OECD, France

01 July 2015
Bibliographic information

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The sharp rise in debt experienced by most OECD countries raises questions about debt indicators and the prudent government debt level countries should target. It also raises questions about the fiscal frameworks needed to reach the prudent debt level and to accommodate cyclical fluctuations along the convergence path towards a prudent debt target. The objective of this paper is to define long-run prudent debt targets for OECD countries and country-specific fiscal rules. The paper presents a comprehensive analysis of government liabilities and assets and formulates recommendations for debt indicators. It also reviews the different linkages between government debt and the economic activity. The lessons from these analyses are combined with an assessment of the uncertainties surrounding the development of macroeconomic variables to define a prudent debt target. Different fiscal rules are compared with regard their impact on fiscal discipline and the risk of recession for country-specific fiscal rules recommendations.
fiscal rules, debt, fiscal policy
JEL Classification:
  • E27: Macroeconomics and Monetary Economics / Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy / Forecasting and Simulation: Models and Applications
  • E61: Macroeconomics and Monetary Economics / Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook / Policy Objectives ; Policy Designs and Consistency ; Policy Coordination
  • E62: Macroeconomics and Monetary Economics / Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook / Fiscal Policy
  • H62: Public Economics / National Budget, Deficit, and Debt / Deficit ; Surplus
  • H68: Public Economics / National Budget, Deficit, and Debt / Forecasts of Budgets, Deficits, and Debt
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