Barbara Baarsma, Roel Beetsma, 18 January 2022

An important vulnerability of the EU economy is high public debt levels. This column proposes revisions to the EU fiscal rules to stimulate debt reduction, which would create budgetary room for stabilisation and growth-promoting spending and also support growth convergence among member states. Climate investment should not interfere with the fiscal rules but be financed through an EU fund, in line with the idea of subsidiarity. It should co-exist with uniform pricing of all greenhouse gas emissions.

Leonardo D'Amico, Francesco Giavazzi, Veronica Guerrieri, Guido Lorenzoni, Charles-Henri Weymuller, 15 January 2022

In January 2023, the escape clause triggered to suspend the rules of the Stability and Growth Pact will expire, possibly forcing painful fiscal adjustments in countries that are already struggling with the impact of the pandemic. In this second column in a two-part series, the authors focus on the debt management aspect of their proposal to strengthen the European fiscal framework. They argue for moving a portion of national debts under the umbrella of a European Debt Management Agency, with the aim of reducing debt costs for the whole Union and helping the operations of the ECB in debt markets.

Luis Garicano, 14 January 2022

The EU’s current fiscal framework has failed to fully deliver on both its goals: ensuring long-term discipline and facilitating a countercyclical fiscal stance. This column argues that the political difficulties of agreeing on a comprehensive Stability and Growth Pact reform can be side-stepped by allowing the Pact to remain in place while attracting countries into a parallel system. The author proposes the establishment of a new European Climate Investment Facility to provide grants and loans to fight climate change until 2050, when the Union must reach net zero emissions, and an independent European Fiscal Agency to assess the good standing of member states to access this new facility.

Miguel Poiares Maduro, Philippe Martin, Jean-Claude Piris, Jean Pisani-Ferry, Lucrezia Reichlin, Armin Steinbach, Beatrice Weder di Mauro, 16 December 2021

The stability and adequacy of the European monetary and fiscal frameworks are increasingly challenged by enduring changes in the economic environment. This column summarises the findings of a group of economists and lawyers specialised in EU matters who undertook a comprehensive assessment of the economic requirements and legal conditions of a well-functioning macroeconomic policy system for the EU and the euro area. They propose reforms of economic framework in line with economic necessities along three dimensions (coordination of fiscal and monetary policies, fiscal rules, and fiscal capacity at EU level) and assess their legal feasibility. They conclude that meaningful reforms that would bring legal clarity and improve economic performance are feasible within the confines of existing primary law.

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.

Jean Pisani-Ferry, 21 September 2021

Questions over the way that Europe is constructed economically have never been more important or urgent. Jean Pisani-Ferry of Sciences Po tells Tim Phillips what issues the CEPR research policy network dedicated to Europe’s Economic Architecture will be focusing on, and how it can influence discussions among policymakers.

Zsolt Darvas, Philippe Martin, Xavier Ragot, 12 September 2018

Proposals for reforming the euro area back on the agenda. An overhaul of the European fiscal rules should be on high on this agenda, because the current fiscal framework has not worked well. This column proposes substituting the numerous and complex present rules with a new, simple rule focused on limiting annual growth rate of expenditures.

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