Download or read book Enforcement and the Stability and Growth Pact How Fiscal Policy Did and Did Not Change Under Europe s Fiscal Framework written by Anthony Annett and published by International Monetary Fund. This book was released on 2006-05 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Stability and Growth Pact has been a success in numerous EU countries, especially in guiding them toward underlying fiscal balance ahead of population aging. These countries tend to be smaller, subject to greater macroeconomic volatility, and reliant on a form of fiscal governance that emphasizes targets and contracts. Most of the new members share these characteristics. For the countries less compatible with the Pact, domestic governance reforms that increase the reputational costs for noncompliance can be useful complements to the fiscal framework.
Download or read book Stability and Growth in Europe written by Antonio Fatás and published by Centre for Economic Policy Research. This book was released on 2003 with total page 112 pages. Available in PDF, EPUB and Kindle. Book excerpt: The fiscal policy framework of the EMU is in a states of crisis. Since the start of EMU, fiscal conditions in some member states have slipped considerably beyond the limits set by the Maastricht Treaty and the Stability and Growth Pact. It is clear that the preventive arm of the Stability and Growth Pact has failed to preclude excessive deficits. There is no shortage of proposals to reform the current fiscal framework in this crisis situation. They range from calls for softening their implementation, and to proposals for closer coordination of national fiscal policies. None of these proposals offers a convincing solution to the problem at the heart of the current crisis: how to balance the need for effective long-run fiscal stability in EMU with the need for short-run flexibility of fiscal policy in the member states. After a detailed analysis of the virtues and defects of the current fiscal framework, this report presents a proposal for reform that addresses this issue. The authors argue that EMU should move away from rigid fiscal rules for annual deficits towards a more judgmental process of monitoring the sustainability of fiscal policies. This approach is guided by three principles: independence, transparency, and legitimacy. Together wit the ability to assess the fiscal situation and outlook of each euro-area member state, they are the keys to designing a framework that provides enough flexibility and, at the same time, can build the required credibility and political support. The authors propose the creation of a Sustainability Council for the EMU, and independent body with the sole statutory task of safeguarding the sustainability of public finances in the euro area. The Sustainability Council regularly and openly reports to the public and the European Parliament its assessment of the member states' fiscal policies, taking into account past performance, current perspectives and the future course of fiscal policies. Its mandate is the counterpart of the ECB's principal task of maintaining price stability. However, the Sustainability Council has no operative role in fiscal policy; it relies solely on the pressure of informed public opinion to discipline national governments. The use of the instruments of fiscal policy is entirely left to the national governments, and the Sustainability Council can only be conceived as a judge of national public finances.
Download or read book Second Generation Fiscal Rules written by Luc Eyraud and published by International Monetary Fund. This book was released on 2018-04-13 with total page 132 pages. Available in PDF, EPUB and Kindle. Book excerpt: Fiscal rule frameworks have evolved significantly in response to the global financial crisis. Many countries have reformed their fiscal rules or introduced new ones with a view to enhancing the credibility of fiscal policy and providing a medium-term anchor. Enforcement and monitoring mechanisms have also been upgraded. However, these innovations have made the systems of rules more complicated to operate, while compliance has not improved. The SDN takes stock of past experiences, reviews recent reforms, and presents new research on the effectiveness of rules. It also proposes guiding principles for future reforms to strike a better balance between simplicity, flexibility, and enforceability. Read the blog
Download or read book Fiscal Policy Making in the European Union written by Martin Larch and published by Routledge. This book was released on 2009-12-16 with total page 219 pages. Available in PDF, EPUB and Kindle. Book excerpt: ""Fiscal policy making in the European Union is a national prerogative that is carried out and co-ordinated within the remits of the Stability and Growth Pact (SGP). The SGP Member States have agreed upon a rules-based framework which, abstracting from operational details, aims to ensure long-term sustainability of public finances while allowing for short-term fiscal stabilization. The success of the EU fiscal framework depends to a large extent on the effectiveness and accuracy of the tool-kit of indicators and methods used at the EU level to monitor and assess the fiscal performance of the Member States vis-a-vis the requirements of the SGP. The contributions to this volume examine key aspects of the measurement of fiscal policy making in the context of the EU fiscal surveillance framework. They highlight strengths and weaknesses of current assessment practice, including innovations implied by the 2005 revision of the SGP." "--Jacket.
Download or read book Fiscal Policy in Europe 1991 2003 written by Andrew Hughes Hallett and published by Centre for Economic Policy Research. This book was released on 2003 with total page 90 pages. Available in PDF, EPUB and Kindle. Book excerpt: This report examines the stance of fiscal policy in Europe since the 1980s, and the attempts that have been made to restrain the excessive deficits that have built up over the past 15 years. Some attempts to impose discipline have been successful, but many have not. The authors examine the reasons for this, and draw lessons for fiscal policy-making in the future. Current policies could weaken the euro. When the effects of a high deficit in one state are spread across the whole currency union, there is an incentive to run a more expansionary fiscal policy. Unsustainable debt paths can therefore be inflationary. Moreover, the loss of national monetary policies may have caused many governments to rely on fiscal policies to reach their goals. Fiscal discipline has therefore weakened visibly since EMU started, and this has undermined the institutional structure that was set up to enforce that discipline. A new structure will eventually be needed. A key point seems to be that a significant consolidation did take place as countries tried to meet the Maastricht criteria. But having qualified, many member states then relaxed their fiscal policies.The results suggest that, within five years of the launch of the euro, this 'Maastricht Effect' of greater discipline will have been eroded. The authors also find evidence that the smaller countries have shown more discipline than their larger neighbours. In addition, they find that governments have attempted to expand their economies for electoral gain. Finally, they emphasise the crucial role of growth. In fact, the report finds that the reductions in debt that have been achieved so far have been created almost exclusively through economic growth. This appears to be true even under regimes with the strictest expenditure controls. As a result, the Stability and Growth Pact appears not to have produced much discipline; but it has created pro-cyclical pressures and generated uncertainty when its enforcement has been uneven. These results show that it may be preferable to have growth-friendly policies, and to give a more prominent place to debt reductions in a regime of fiscal restraint.
Download or read book Building a Strengthened Fiscal Framework in the European Union written by European Commission. Directorate-General for Economic and Financial Affairs and published by . This book was released on 2013 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: "This publication provides a non-technical overview of the Stability and Growth Pact, the rule-based framework for fiscal policy in the European Union. It is divided into two sections. The first section provides a historical look at the evolution of the SGP's framework, from the Pact's origins in the Maastricht Treaty to the most recent Two Pack reforms. It presents the changes that were made to the framework over the years and discusses the reasons for the reforms. The second section provides a description of the application of the SGP today, structured around the SGP's two arms, the preventive arm and the corrective arm.."--Document home page.
Download or read book Playing by the Rules written by Luc Eyraud and published by International Monetary Fund. This book was released on 2015-03-24 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper contributes to the discussions on fiscal governance in Europe. It takes stock of recent reforms, identifies areas for further progress, and discusses a menu of policy options for the medium-term. The issues covered include: (i) the growing complexity of the European framework and ways to simplify it; (ii) the difficulties to measure and implement structural stance indicators; (iii) the challenge of reconciling fiscal sustainability and growth; (iv) the need to enhance coordination in the area of monitoring; and (v) the obstacles to compliance and proposals to strengthen enforcement.
Download or read book Europe and the Euro written by Alberto Alesina and published by University of Chicago Press. This book was released on 2010-04-01 with total page 476 pages. Available in PDF, EPUB and Kindle. Book excerpt: It is rare for countries to give up their currencies and thus their ability to influence such critical aspects of their economies as interest and exchange rates. Yet ten years ago a number of European countries did exactly that when they adopted the euro. Despite some dissent, there were a number of arguments in favor of this policy change: it would facilitate exchange of goods, money, and people by decreasing costs; it would increase trade; and it would enhance efficiency and competitiveness at the international level. A decade is an ideal time frame over which to evaluate the success of the euro and whether it has lived up to expectations. To that aim, Europe and the Euro looks at a number of important issues, including the effects of the euro on reform of goods and labor markets; its influence on business cycles and trade among members; and whether the single currency has induced convergence or divergence in the economic performance of member countries. While adoption of the euro may not have met the expectations of its most optimistic proponents, the benefits have been many, and there is reason to believe that the euro is robust enough to survive recent economic shocks. This volume is an essential reference on the first ten years of the euro and the workings of a monetary union.
Download or read book Reforming Fiscal Governance in the European Union written by Michal Andrle and published by International Monetary Fund. This book was released on 2015-05-21 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: Successive reforms have brought many positive elements to the European Union’s fiscal framework. But they have also increased its complexity. The current system involves an intricate set of fiscal constraints, which hampers effective monitoring and public communication. Compliance has also been weak. This note discusses medium-term reform options to simplify the framework and improve compliance. Based on model simulations and practical considerations, it argues for moving to a two-pillar approach, with a single fiscal anchor (public debt-to-GDP) and a single operational target (an expenditure growth rule, possibly with an explicit debt correction mechanism) linked to the anchor.
Download or read book Reforming the EU Fiscal Framework written by Mr. Nathaniel G Arnold and published by International Monetary Fund. This book was released on 2022-09-05 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: The EU’s fiscal framework needs reform. While existing fiscal rules have had some impact in constraining deficits, they did not prevent deficits and debt ratios that have threatened the stability of the monetary union in the past and that continue to create vulnerabilities today. The framework also has a poor track record at managing trade-offs between containing fiscal risks and stabilizing output. Finally, the framework does not provide sufficient tools for EU-wide stabilization. This was most visible during the decade following the euro area sovereign debt crisis, when structurally low real interest rates stretched the policy tools of the European Central Bank (ECB), leading to a persistent undershooting of its inflation target. This paper proposes a new framework based on risk-based EU-level fiscal rules, strengthened national institutions, and a central fiscal capacity. First, risk-based EU-level fiscal rules would link the speed and ambition of fiscal consolidation to the level and horizon of fiscal risks, as identified by debt sustainability analysis (DSA) using a common methodology developed by a new and independent European Fiscal Council (EFC). The 3 percent deficit and 60 percent debt reference values would remain. Second, all member countries would be required to enact medium-term fiscal frameworks consistent with the EU-level rules—that is, to ensure convergence over the medium-term to an overall fiscal balance anchor by setting expenditure ceilings. Independent national fiscal councils (NFCs) would have a much stronger role to strengthen checks and balances at the national level (including undertaking or endorsing macroeconomic projections and performing DSAs to assess fiscal risks). The European Commission (EC) would continue to play its key surveil¬lance role as articulated in the Maastricht Treaty and the EFC would be the center of a peer network of fiscal councils. Third, building on the recent experience with the NextGenerationEU (NGEU), an EU fiscal capacity (FCEU) would improve euro area macroeconomic stabilization and allow the provision of common EU public goods—a task that has become more urgent given the green transition and common security concerns. Central to the proposal is a mutually reinforcing relationship between EU rules and national-level imple¬mentation. Strengthening implementation requires both better national ownership of the rules and their application and greater congruence of national-level frameworks with EU-level rules. The former can only be achieved by rules that convincingly balance the needs of members with the avoidance of negative externali¬ties across members. This argues for a risk-based approach—the first pillar of our proposal. The latter requires a stronger role for significantly upgraded national level frameworks—the second pillar of our proposal.
Download or read book Is there a structural or a political fault in the fiscal governance of the EU written by Tom Wan and published by GRIN Verlag. This book was released on 2016-09-28 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: Thesis (M.A.) from the year 2012 in the subject Politics - Topic: European Union, grade: Merit, London School of Economics (European Institute), course: Politics and Government in the EU, language: English, abstract: The non-compliance to the Stability and Growth Pact in the early 2000’s was a direct challenge to the co-operative virtue of EU fiscal governance, and the fact that its occurrence played little role in affecting the stability for Europe’s most significant achievement yet – the Single Currency – was in itself a truly peculiar incident. Betrayed by the deeds of the two locomotives of the European Project, Germany and France, only four years after the adoption of the Euro – yet the currency strides on and none of the adverse effect that Economists feared had happened. But was that it? The fact that both of these nations could escape sanction by coercing other nations in debt to vote against a punishment for their excessive fiscal deficit announced a deep functional fault in the enforcement of agreed EU treaties on the Commission’s part; and knowing that the stability of the Euro hinged upon an incomplete fiscal federation where fiscal responsibility laid heavily on the shoulders of the member states, there was indeed a commitment crisis exhibiting itself in 2003. This paper aimed to answer two questions: first, what have caused the member states, such as France and most curiously, Germany, the one who had stressed the need for fiscal discipline every step of the way during the negotiation stage to safeguard the Euro, to renegade on a pact that was supposed to guarantee just that? Second, in light of the silence of the international capital market towards the incident, what, if any, had the demise of EDP contributed to the study of fiscal governance and political integration in the EU?
Download or read book The Future of the Stability and Growth Pact as a Tool for Economic Policy Co ordination written by Hugo Zsolt de Sousa and published by . This book was released on 2004 with total page 57 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Fiscal Policy Surveillance in Europe written by Peter Wierts and published by Palgrave MacMillan. This book was released on 2006 with total page 362 pages. Available in PDF, EPUB and Kindle. Book excerpt: The creation of the Economic and Monetary Union (EMU) and the introduction of the euro have given a strong impetus to fiscal policy coordination in the European Union (EU). The EU fiscal framework and the Stability and Growth Pact provide for the systematic surveillance of the fiscal policies of the large and heterogeneous group of 25 Member States. In this book, contributors from leading academic and international-policy institutions give a comprehensive overview of the central themes of current fiscal policy, including the impact of ageing populations on fiscal sustainability, the conduct of fiscal policy over the economic cycle, creative accounting in response to fiscal rules, fiscal decentralization, EU enlargement, and the link between expenditure reform and economic growth.
Download or read book The Stability and Growth Pact written by Martin Larch and published by . This book was released on 2010 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: "While current instruments of EU economic policy coordination helped stave off a full-scale depression, the post-2007 global financial and economic crisis has revealed a number of weaknesses in the Stability and Growth Pact, the EU framework for fiscal surveillance and fiscal policy coordination. This paper provides a diagnosis of how the SGP faired ahead and during the present crisis and offers a first comprehensive review of the ongoing academic and policy debate, including an account of the reform proposals adopted by the Commission on 29 September 2010. In our view, the current system of EU rules is unbalanced. It consists of (i) very specific provisions on how to conduct fiscal policy making in normal times with no effective enforcement mechanisms, and of (ii) no or extremely tight provisions for really bad economic times, like the Great Recession. A two-pronged approach as outlined in this report is needed to revive the Pact: tighter enforcement, coupled with broader macroeconomic surveillance, in good times and an open window for exceptionally bad times, including a crisis resolution mechanism at the EU level."--Publication information p.
Download or read book Fiscal Policy in the European Union written by Jesus Ferreiro and published by Palgrave MacMillan. This book was released on 2008-11-27 with total page 248 pages. Available in PDF, EPUB and Kindle. Book excerpt: "This book offers a comprehensive analysis of current national fiscal policies in the European Union and European Monetary Union, and provides insights into the consequences of these fiscal policies on economic activity. With contributions from a range of experts, the book focuses on the coordination problems between the single monetary policy and national fiscal policies, and the negative impact on the capacity of fiscal policy to correct short-term economic fluctuations and to accelerate economic growth in the long-term in European economies. This book is an essential read for all interested in the role of fiscal policy in the European Union."--BOOK JACKET.
Download or read book The Enforcement Dilemma of EU Fiscal Rules written by Georg Kirchsteiger and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Effective enforcement is an essential element of any fiscal rule. The EU’s Stability and Growth Pact (SGP) has been struggling with this truism since inception. In this paper we show that its effectiveness goes beyond the threat of fines. The notion that deficit-prone member states would adopt a more virtuous fiscal behaviour to avert sanctions under the SGP is overshadowed by the understanding that in the event of a major shock the virtuous countries will come to their rescue as the survival of the entire system is at stake. Unless the underlying risks of running afoul of the SGP are addressed, the effectiveness of fines is limited. Beyond majorities in the decision-making bodies, SGP enforcement crucially depends on the resilience of member states’ economies and the macro-conditionality deficit-prone countries face in the wake of major shocks in return for financial support.
Download or read book European Fiscal Policies Under the Stability Pact written by Harmen Lehment and published by . This book was released on 2002 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt:
