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Title: Notes on 'A Code for Fiscal Stability'

Author(s): Willem H. Buiter

Publication Date: March 1998

Keyword(s): fiscal stability, golden rule, public sector balance sheet and public sector capital

Programme Area(s): International Macroeconomics

Abstract: This note comments on two central issues for fiscal policy design in the United Kingdom, highlighted in the recent ?Code for Fiscal Stability? proposed by the new Labour government. The first concerns the merits of the so-called ?golden rule of public sector investment? ? the proposition that, over the cycle, government borrowing should not exceed government capital formation. The second concerns the case for attempting to construct a more comprehensive balance sheet of public sector assets and liabilities, including tangible public sector assets and certain contingent claims. The two main conclusions are that the golden rule is without merit but that, subject to some important caveats, the construction of a more comprehensive government balance sheet is a worthwhile enterprise.

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Bibliographic Reference

Buiter, W. 1998. 'Notes on 'A Code for Fiscal Stability''. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=1831