Theoretical foundations and institutional design of fiscal stabilization rules

다국어 초록 (Multilingual Abstract)

The main purpose of this study is to examine the theoretical rationale for a fiscal stabilization rule and to propose policy measures for its effective operation. To this end, the study contrasts the tax smoothing theory, understood as the optimal fiscal policy, with the procyclical patterns that actually characterize government fiscal policy in practice, thereby illuminating the gap between theory and practice, and it discusses the policy justification for a fiscal stabilization fund as an instrument for realizing the tax smoothing principle. On this basis, the study argues that a fiscal stabilization rule, which institutionally sets aside the cyclical surpluses generated during expansions, is essential for securing fiscal soundness and enhancing countercyclical capacity. Finally, the study reviews the operating methods and limitations of the fiscal stabilization funds that Korean local governments have recently introduced, and discusses operational considerations for enhancing fiscal stability in a manner consistent with the purpose of the institution.