Fiscal Rule: Balance between Sustainability and Developmenta

This paper assesses the impact of the fiscal rule mechanismb in Russia on the dynamics of state budget investments and the level of public debt. The study adapted and applied for the first time the synthetic control method. The estimates confirm that the application of the budget rule was not the main factor in the reduction of budget investments in Russia. The empirical results also demonstrate the ability of the limiting mechanism to curb the growth of public debt. The relatively low volume of budget investments against the backdrop of maintaining a low level of public debt may be determined by the commitment of fiscal authorities to both the priority of budget sustainability and a conservative approach to financing investment expenditures. Strengthening the role of budget investments as a factor in economic growth is possible by revising both the principles of implementing budget policy and its individual mechanisms, including the design of the budget rule.