The European Fiscal Rules Need Major Reforms
Abstract The European fiscal rules are to be reactivated in 2023 or 2024. In their current form, they pose a significant threat to economic recovery and the investment urgently required to achieve climate neutrality. This paper makes proposals to create more economically sound fiscal rules. In the l...
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| Main Author: | |
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| Format: | Article |
| Language: | deu |
| Published: |
Sciendo
2022-06-01
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| Series: | Wirtschaftsdienst |
| Online Access: | https://doi.org/10.1007/s10273-022-3218-0 |
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| Summary: | Abstract The European fiscal rules are to be reactivated in 2023 or 2024. In their current form, they pose a significant threat to economic recovery and the investment urgently required to achieve climate neutrality. This paper makes proposals to create more economically sound fiscal rules. In the long term, the Maastricht criteria should be replaced by a more comprehensive set of indicators. Right now, the existing investment clause should be broadened to the extent that the deficit rule becomes a (green-)golden rule. Furthermore, the structural deficit rule should be replaced by an expenditure rule. Estimations of the structural deficit are prone to huge revisions and the current set of fiscal rules led to harmful pro-cyclicality during the euro crisis. |
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| ISSN: | 1613-978X |