Fiscal rule to promote economic stability: Analysis of Brazil and Turkish economy

Keynesian economics emerging after the great depression kept its influence on world?s economic policies until1960?s. Nevertheless, large increases in public debt in most of the countries that implemented Keynesian economic policies and failure of Keynesian policies to combat stagflation during 1970?s have resulted in a rise of monetarist economic policies in many countries. During the same period, arbitrary economic policies that give vast authority to politic groups and damaging effects of these policies in economy have brought new discussions about rule-based economic policies. Especially, fiscal rule implementation has been took place in countries which experienced unstable public finances to maintain the fiscal discipline after 1980?s.The main purpose of this study is to explain concepts of fiscal discipline and fiscal rule in details and to examine fiscal rule implementation in various countries. Assessing Brazil and Turkish economies in the context of fiscal rule implementation and providing information on their economic outlook are especially important part of this study. In this context, pre-defined quantitative goals according to fiscal rules and their realization in these countries were compared. Overall, implementations of fiscal rules have seemed to contribute long term economic stability in countries. Implementations of some policies in Turkey that resemble fiscal rules have been diluted due to political manipulation. Thus, it was concluded that rule-based fiscal policies would be beneficial to maintain long term economic stability in Turkey.