What is the golden rule for public finance?

The golden rule for public finance states that a government should only borrow to invest in productive assets that will generate future economic returns, rather than borrowing for current consumption. This principle aims to ensure fiscal sustainability by balancing budgets over the economic cycle, allowing for borrowing during downturns as long as surpluses are achieved during periods of growth. By adhering to this rule, governments can promote long-term economic stability and reduce the burden of debt on future generations.