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Ryota Nakatani

the government deficit bias is severe (Yared 2018 ). The existing literature reports mixed results on the impact of escape clauses on fiscal stance. For example, Guerguil et al. ( 2017 ) find that escape clauses in fiscal rules do not seem to affect the cyclical stance of fiscal policy and public spending. In contrast, Combes et al. ( 2017 ) find that fiscal rules with escape clauses are harmful for stabilization in high-debt countries by making fiscal policy more procyclical. Thus, country authorities should be very careful when applying escape clauses to violate