Stability and Growth Pact

Countries that have successful fiscal rules include Brazil, where the law has fostered the credibility of the government s policies, and Chile, where fiscal rules had a role in protecting social spending in 2004. Automatic stabilizers tend to be most effective in industrial countries. Failures of fiscal rules in Argentina and elsewhere in Latin America are among the factors that contributed to macroeconomic instability (Singh and others 2005). An example of a fiscal rule that has not been fully enforced is the European Union s Stability and Growth Pact. 

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