Rules, stability, and growth

Research output: Contribution to journalArticlepeer-review

12 Scopus citations


This paper examines two systems of fiscal redistribution in the context of a growing economy subject to unexpected shocks, rules and discretion. Under the former system, the tax system is in place and is known to households contemplating investment decisions. Under the second, redistribution is decided upon only after the investment decisions have been made. I find that rules always lead to faster capital accumulation and growth, but political support for them is only likely to occur in a stable economy. Income inequality adversely affects the likelihood of adopting rules, especially so in an unstable economy.

Original languageEnglish
Pages (from-to)471-484
Number of pages14
JournalJournal of Development Economics
Issue number2
StatePublished - 20 Apr 2002


  • Discretion
  • Economic growth
  • Fiscal rules
  • Stability

ASJC Scopus subject areas

  • Development
  • Economics and Econometrics


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