Abstract

Introduction of fiscal rule was damaging, because it eliminates the fiscal instrument of economic policy and leads to fiscal austerity which damages economic and social life. It is based on wrong theory and it diminishes economic sovereignty of a country all under dictate of ordoliberals. After adoption, the application of the fiscal rule created normative exuberance, methodological discretion, based on weak statistical data, all leading to the wrong empirical calculations and suboptimal growth of the Slovenian economy thus contributing to the Slovenia's »lost decade«.

This article consists of introductory thoughts, a summary of theory, description of normative framework for fiscal rule in the EU and particularly in Slovenia, comments on constitutional changes and on law of fiscal rule, and critical evaluation of its application in practice with illustration of its negative impact on the economy.

Keywords: fiscal rule, fiscal policy, austerity, ordoliberalism.