Effects of Budget Rules on Fiscal Policy and Economic Growth

1-Malak M. Dally

Lebanese International University

2-Mohammad Y. Chreif

Lebanese International University

3-Mohamed Balouza

Lebanese University

4-Nisreen Afif Abi Farraj

American University Of Culture & Education

Abstract

This research aims to study аnd systematize the world experience of introducing rules into fiscal policy аnd to identify the grounds that determine the impact of fiscal policy rules on economic growth. The accumulated world experience of using budget rules is very contradictory. Existing studies do not explain why in some cases the application of the rules contributed to the achievement of the goals of their introduction in others, while the goals were not achieved. In а number of cases, it was noted that the rule restrictions were simply not enforced. In а number of other cases, the effectiveness of the rules was found: reduction of debt problems, reduction of the budget deficit. It is noted that the introduction of rules can strengthen business cycles, limit opportunities for countercyclical policies. The dissertation research is based on the methods of econometrics аnd macro econometric modeling, as well as on modern approaches to the macroeconomic analysis of economic policy.  At The End this paper finds a direct influence of three types of fiscal rules: expenditure rules, fiscal balance rule, аnd debt rules.

Keywords: Economic Growth, Fiscal Policy, Budget Rules.