Agnès Bénassy-Quéré, 06 May 2022

The role of fiscal rules is to ensure debt sustainability and predictability of fiscal policies. It is possible to make them simpler and more friendly to countercyclical policies. Rather than allowing for different investment priorities, this column argues that the Covid crisis, the climate emergency, and Russia's invasion of Ukraine and subsequent security concerns may require a holistic approach where better compliance with fiscal rules could be combined with a holistic definition of sustainability that would also include macroeconomic and green sustainability.

Philippe Martin, Lucrezia Reichlin, 01 March 2022

What are the economic imperatives and legal hurdles for reform? A new CEPR Policy Insight identifies the fault lines in the EU framework and suggests what can be done economically and legally to repair them.

Read more about this research and download the Policy Insight:
M. Maduro, P. Martin, JC Piris, J. Pisani-Ferry, L. Reichlin, A. Steinbach, B. Weder di Mauro, Revisiting the EU framework: Economic necessities and legal options, CEPR Policy Insight No 114.

Niels Thygesen, Roel Beetsma, Massimo Bordignon, Xavier Debrun, Mateusz Szczurek, Martin Larch, Matthias Busse, Mateja Gabrijelcic, Laszlo Jankovics, Janis Malzubris, 10 November 2021

The policy responses to the Covid-19 pandemic underscored two interlinked issues in the EU fiscal surveillance framework: the failure or difficulty on the part of some member states to build fiscal buffers in good times, followed by the tendency to find new often improvised forms of flexibility in the implementation of the EU fiscal rules or through new elements of risk sharing when times turn bad. The latest European Fiscal Board annual report proposes a reform to the EU fiscal framework based on (1) a medium-term debt anchor; (2) an expenditure rule as the main policy instrument; and (3) a single escape clause applied on the basis of independent analysis.

Coen Teulings, 13 September 2018

The decade following the Lehman Brothers bankruptcy was a traumatic period for the euro area. Though the financial crisis originated in the US, the recovery there was quicker than in the euro area, and the output loss in the euro area appears to be about 15% compared to ‘only’ 10% for the US. This column argues that the imbalance between monetary and fiscal integration seems to have been an important factor behind the euro area being hit more severely than the US. A revision of the fiscal rules is needed.

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