Darvas Z., Martin P., Ragot X., (2018), “European fiscal rules require a major overhaul”, Bruegel, 24 October
The reconsideration of the complex set of European fiscal rules should be a priority in terms of euro-area reform. The rules contributed to excessive fiscal austerity during the crisis, thus helping to aggravate and prolong its economic, social and political consequences. Moreover, either because countries did not abide by the rules or because the rules were not sufficiently strictly applied during good years, there was insufficient debt reduction in many countries in the 2000s, which reduced their fiscal capacity during bad years. In addition, the rules suffered from large measurement problems. They are based on a valid theoretical concept – the structural budget balance – but this is not observable and its estimation is subject to massive errors.
Relevant Posts
- Xavier Debrun, Luc Eyraud, Andrew Hodge, Victor Lledo, Catherine Pattillo, (2018), «‘Second-generation’ fiscal rules: From stupid to too smart», VoxEU, 22 May
- Roel Beetsma, Martin Larch, (2018), «Risk reduction and risk sharing in EU fiscal policymaking: The role of better fiscal rules», VoxEU, 9 May