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Swiss Journal of Economics and Statistics

, Volume 148, Issue 1, pp 37–55 | Cite as

Application of the Swiss fiscal rule to artificial data a Monte Carlo simulation

  • Alain Geier
Open Access
Article
  • 37 Downloads

Summary

The Swiss fiscal rule or “debt brake” is applied to simulated data of economic output and fiscal revenues. The budget remains almost perfectly balanced and the debt ratio stable over the medium and long term: The cyclical adjustment of the debt brake is effective in terms of its primary objective of achieving a balanced budget over the medium term. The rule also performs well with respect to the objective of taking into account the position of the economy in the cycle. In the case of a non-stationary GDP series, however, this result can not be guaranteed anymore.

JEL-Classification

H61 E62 

Keywords

Balanced Budget Debt Deficit Budgeting Business Cycle 

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Copyright information

© Swiss Society of Economics and Statistics 2012

Authors and Affiliations

  • Alain Geier
    • 1
  1. 1.University of Neuchâtel and Federal Finance AdministrationSwitzerland

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