The Swiss Debt Brake Is Democratic, Strict, Transparent, and Binding. A Model to Follow?
-
Martin Mosler
and
Christoph Schaltegger
Abstract
The Swiss debt brake at the federal level was accepted in 2001 by a direct democratic referendum, where it received an overwhelming approval rate of almost 85 percent “yes” votes. The fiscal rule mandates that budgeted expenditures cannot exceed cyclically adjusted expected revenues, targeting gross debt while prohibiting new structural debt. Violations due to ordinary or extraordinary expenditures are transparently recorded in separate accounts, which must be balanced within three and six years, respectively. The federal rule is complemented by decentralized debt brakes at the cantonal level. Compared to a synthetic Switzerland without the federal debt brake, the fiscal rule did not decrease public investments, with the notable exception of military expenditure. Additionally, the accuracy of budget forecasts has improved, evidenced by reduced discrepancies between projected and actual revenues and expenditures.
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- The Case for Putting a Public Investment Clause into the German Debt Brake
- EU Debt Instruments and Fiscal Transparency: The Case of the EU Recovery Fund
- Explaining the Divergence in German and French Public Finances
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- The Swiss Debt Brake Is Democratic, Strict, Transparent, and Binding. A Model to Follow?
Articles in the same Issue
- Frontmatter
- Editorial
- Economic Policy Making Under Hardening Fiscal Constraints
- Policy Papers (No Special Focus)
- A Latticework of Inflation Models
- A Comparative Evaluation of Fiscal Stabilization Strategies during the Covid-19 Pandemic with Germany as a Reference Point
- The Relationship Between the German Current Account and Financial Account: Evidence from the Toda-Yamamoto Causality Approach
- The Tax Attractiveness of EU Locations for Corporate Investments: A Stocktaking of Past Developments and Recent Reforms
- Aid in Conflict: Determinants of International Aid Allocation to Ukraine During the 2022 Russian Invasion
- Policy Forum: Economic Policy in an Era of Hardening Fiscal Constraints
- Public Debt Ratios Will Increase For Some Time. We Must Make Sure That They Do Not Explode
- An EU Fund to Incentivise Public Investments with Positive Externalities
- The Case for Putting a Public Investment Clause into the German Debt Brake
- EU Debt Instruments and Fiscal Transparency: The Case of the EU Recovery Fund
- Explaining the Divergence in German and French Public Finances
- Fiscal Prospects for Italy
- The Swiss Debt Brake Is Democratic, Strict, Transparent, and Binding. A Model to Follow?
