Fiscal Rules in A Context of New Consensus Macroeconomics and Economic Crisis: Lessons from Brazil and Spain

In this article we compare the economic performance of public finances in Brazil and Spain, which applied economic policies based on the New Consensus Macroeconomics (NCM). After reviewing some considerations of the NCM and Stability Growth Pact theoretical bases, we have compared the Brazilian and the Spanish macroeconomic policies and their results during the 2000s years. Finally, we have conducted a simulation exercise to investigate to which extent the use of explicit fiscal rules would have improved the macroeconomic performance in Brazil and Spain. We conclude that the more flexible performance of fiscal policies in Brazil seems to have been more successful than that of the stricter European fiscal requirements that guide the Spanish fiscal results.