Fiscal rules are being increasingly used by both emerging and developed economies. This paper analyzes two alternative fiscal policy rules in terms of their impact on debt sustainability: a rule that fixes the ratio of primary surplus to GDP (quot;fixed surplus rulequot;) and one that sets the...

Both emerging and developed economies increasingly use fiscal rules. This paper analyzes the effects of two alternative fiscal rules on debt sustainability. The fixed surplus rule fixes the ratio of primary surplus to gross domestic product (GDP), and the variable surplus rule sets the primary...