Front Matter Page

How to Design Subnational Fiscal Rules

A Primer

NOTE 20/01

Front Matter Page

Fiscal Affairs Department

How to Design Subnational Fiscal Rules A Primer

Prepared by Luc Eyraud, Andrew Hodge, John Ralyea, and Julien Reynaud

INTERNATIONAL MONETARY FUND

Front Matter Page

©2020 International Monetary Fund

Cover Design: IMF Multimedia Services

Composition: The Grauel Group

HOW TO NOTE

Fiscal Affairs Department

How to Design Subnational Fiscal Rules: A Primer

Prepared by Luc Eyraud, Andrew Hodge, John Ralyea, and Julien Reynaud

Names: Eyraud, Luc. | Hodge, Andrew. | Ralyea, John (Economist). | Reynaud, Julien. | International Monetary Fund. Fiscal Affairs Department, issuing body. | International Monetary Fund, publisher.

Title: How to design subnational fiscal rules : a primer / prepared by Luc Eyraud, Andrew Hodge, John Ralyea, and Julien Reynaud.

Other titles: How to notes (International Monetary Fund).

Description: Washington, DC : International Monetary Fund, 2020. | How to notes / International Monetary Fund. | February 2020. | At head of title: Fiscal Affairs Department. | Includes bibliographical references.

Identifiers: ISBN 9781513527031 (paper) | 9781513529820 (Web PDF)

Subjects: LCSH: Fiscal policy—Design. | Subnational governments—Economic aspects.

Classification: LCC HJ192.5.E97 2020

DISCLAIMER: Fiscal Affairs Department (FAD) How to Notes offer practical advice from IMF staff members to policymakers on important fiscal issues. The views expressed in FAD How to Notes are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

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Contents

  • 1. Introduction

  • 2. Definition of Subnational Fiscal Rules

  • 3. Analytical Framework: Rationale for Subnational Borrowing and Subnational Rules

  • 4. Selecting Subnational Rules

  • 5. Making Subnational Rules Flexible

  • 6. Calibrating Subnational Rules

  • Annex. How Various Fiscal Rules Allow and Constrain Borrowing

  • References

How to Design Subnational Fiscal Rules: A Primer
Author: Luc Eyraud, Andrew Hodge, Mr. John Ralyea, and Julien Reynaud