I've got a two-story balloon frame house that is gutted. I have to install fire blocking between studs in the wall cavity. Do I install the fire blocking wherever there is a floor, or wherever there is a ceiling? (Or both?)
Blocking is required wherever a fire or draft can pass from horizontal plane to a vertical plane or vice versa. In otherwords, where the wall meets the floor and the floor meets a ceiling. If fire can pass through one section and travel to another, it needs to be blocked. The 2012 IRC code says that a 16" section of fiberglass insulation will suffice as fireblocking. If you are insulating the outside walls as it is, you will be covered.
Whoa...who says you, "have to install X-type (fire resistant) 5/8" sheetrock on my exterior walls anyway, and so that satisfies the lateral fire blocking requirement."
First, Sheetrock on exterior walls is for fire resistance or lateral resistance, not for fire blocking.
Second, sheetrock for fire resistance on exterior walls is ONLY required when your exterior wall needs to be "fire rated". Fire rating for residential construction is ONLY required if the house is constructed too close to the property line...and then only on that one side of the house.
Third, if it's for "lateral resistance", then it must be installed in a certain pattern and nailed properly (correct size and spacing of nails).