Download or read book EU Fiscal Governance and the Effectiveness of Its Reform written by Alexandre de Streel and published by . This book was released on 2014 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper analyses the reforms of the fiscal governance in the Euroopean Union introduced after the euro crisis. The first section is descriptive and gives a brief overview of the new fiscal governance as modified by the six-pack, the TSCG and the two-pack. The second section is critical and analyses the weaknesses of the original fiscal governance and the effectiveness of the recent reforms. The third section briefly concludes. Originally in 1992, the EU fiscal governance was based on fiscal decentralisation constrained by rules (limits of 3% government deficit and 60% government debt) whose compliance was monitored annually and whose violation are sanctioned (the excessive deficit procedure). The financial solidarity was minimal. The Euro crisis and the high financial instability of some Member States have shown the severe flaws of such governance model: the fiscal rules were sometimes inappropriate and often poorly implemented. Inevitably then, the crisis led to more financial solidarity than expected. To remedy those flaws, the EU fiscal governance has been substantially reformed by the six-pack in 2011, the TSCG in 2012 and the two-pack in 2013. Such reforms, which were probably the only politically feasible, have improved the three components of the governance: on rules, they make the fiscal objectives and limits smarter; on institutions, they improve the quality of data and forecasts needed to apply properly the rules, and ensure a better national ownership; on enforcement, they improve the design and the decision-making process of the sanctions at the EU level and create an national correction mechanism. All of that could still be fine-tuned: the fiscal rules could better differentiate between productive and less productive public investment, a network of the Commission and the newly established national fiscal councils could be set up, and the decision-making process and the criteria used by the Commission in proposing the sanctions could be made more transparent. But more fundamental reforms are needed to ensure the sustainability of the EMU. The legitimacy of the new EU surveillance and sanctions tools should be improved in several ways: explaining better the rationale for the constitutionalization of the fiscal rules, enhancing dialogue between EU and national bodies (economic dialogue ...) as well as among national institutions (parliament, IFCs ..), increasing the EU parliamentary oversight where the Commission power have been enhanced. Other models of governance may also be developed. The sticks of the fiscal governance (sanctions) should be complemented with carrots (financial incentives). More centralisation of fiscal policy could be ensured with the creation of a Eurozone budget to absorb asymmetric macro-economic shocks or the issuance of common Eurobonds. Those reforms may be difficult to agree today, but the risk is that the fatigue of the citizens towards the European Union, of which the economic governance is one of the most visible parts, and the rise of nationalism within the Member States will make any reform even more difficult tomorrow.
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 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 Reforming Fiscal Governance in the European Union written by and published by . This book was released on 2015 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 Fiscal Decentralization Reforms written by Michal Plaček and published by Springer Nature. This book was released on 2020-05-05 with total page 214 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book examines the impacts of fiscal decentralization reforms on the efficiency of local governments in Central and Eastern European (CEE) countries. By offering a comparative perspective and by applying econometric methods and regression models, it analyses various reform trajectories and their effects on individual CEE countries. Furthermore, the book discusses input and output indicators for evaluating the efficiency of municipalities. Readers will learn about the common features of these countries, the impact of path dependence, and future prospects for decentralization reforms. In closing, the book discusses modern management and administration methods, opportunities for cooperation between municipalities, co-creative service delivery, and other measures that could improve the efficiency of public service provision.
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 Adapting the EU Fiscal Governance to New Macroeconomics and Political Realities written by Raffaele Fargnoli and published by . This book was released on 2020 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: Reforming the Stability and Growth Pact is regarded by almost all accounts as a top priority, although finding a political agreement on a new model seems at this stage highly problematic. The widespread consensus on the need to modify current fiscal rules has triggered a wave of new studies and reform proposals. The aim of this paper is to reflect on whether it is possible to find an optimal design of fiscal rules to promote sound and effective fiscal policy conduct in the EMU in most circumstances. This question is discussed under three different dimensions: i) the political economy of fiscal rules in the current political and economic environment; ii) the renewed theoretical debate about fiscal policy roles and objectives; iii) the currently incomplete nature of the Economic and Monetary Union and the prospects for its completion. Drawing a number of conclusions from this conceptual framework, the paper suggests a pathway for an overhaul of the EU fiscal governance, based on a more cooperative approach between the EU and national governments, presenting general principles and more specific features.
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 Towards a Single Performance Indicator in the EU s Fiscal Governance Framework written by and published by . This book was released on 2022 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: A key element of the European reform agenda is to simplify the EU fiscal governance framework by moving towards a single debt anchor and a single operational indicator as the basis for formulating fiscal targets and assessing compliance. This paper puts forward an in-depth analysis of two alternative fiscal performance indicators currently used in the EU fiscal framework: the change in the structural balance and the expenditure benchmark. Comparing these two indicators allows us to identify options for the design of a fiscal performance measure - such as assumptions on cyclical adjustment and the inclusion of fiscal variables - and assess their policy impact. Our paper finds that the expenditure benchmark used in the EU fiscal governance framework has advantages over the change in the structural balance. However, it still has scope for improvement. The paper also shows that taking account of interest payments in the expenditure benchmark would make fiscal policy more supportive of the monetary policy stance.
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 Domestic Budgets in a United Europe written by Mark Hallerberg and published by . This book was released on 2004 with total page 266 pages. Available in PDF, EPUB and Kindle. Book excerpt: Under European Monetary Union, member states lose the ability to steer their economies by manipulating monetary policy. Domestic Budgets in a United Europe, which explains the content, evolution, and effectiveness of fiscal institutions, will be the definitive account of European budget reform in the late twentieth century.Mark Hallerberg examines the making of budgets in EU countries from 1973 to 2000 and explores why those countries introduced fiscal rules when they did. In 1993, when the fiscal-policy criteria for monetary union were first announced, only Luxembourg and the Republic of Ireland would have qualified. In 1997, only Greece failed. Various explanations have been advanced for this rapid turnaround, including luck (a favorable economic climate reduced pressures on local budgets), accounting tricks, and the increasing pressures caused by international capital mobility. Underlying these various explanations is a basic skepticism about whether countries in the European Union actively worked to reform their national budgeting procedures. In rich case studies, Hallerberg shows that the member-states did indeed reform their budget institutions. Many of them, he finds, had started that process long before the formal signing of the Maastricht Treaty of 1991, making domestic changes that allowed them to qualify individually under EMU criteria.
Download or read book Fiscal Governance in Europe written by Mark Hallerberg and published by Cambridge University Press. This book was released on 2010-08-16 with total page 246 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book presents a theoretical framework to discuss how governments coordinate budgeting decisions. There are two modes of fiscal governance conducive to greater fiscal discipline, a mode of delegation and a mode of contracts. These modes contrast with a fiefdom form of governance, in which the decision-making process is decentralized. An important insight is that the effectiveness of a given form of fiscal governance depends crucially upon the underlying political system. Delegation functions well when there few, or no, ideological differences among government parties, whereas contracts are effective when there are many such differences. Based on original research, the book classifies European Union countries from 1985 to 2004. Empirically, delegation and contract states perform better than fiefdom states if they match the underlying political system. Additional chapters consider why countries have the fiscal institutions that they do, fiscal governance in Central and Eastern Europe, and the role of such institutions in the European Union.
Download or read book Italy and Fiscal Rules written by Davide Assalve and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Implications of an EU Fiscal Union for Local and Regional Authorities written by and published by . This book was released on 2012 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Keep it Simple Not Stupid written by Kuusi Tero and published by . This book was released on 2022 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper, we describe key problems of the current EU's fiscal framework and offer constructive options for its reform. A comprehensive reassessment of the rules is necessary, as the development of the rules has reached an impasse for both political and technical reasons. In our view, Europe needs fiscal rules to ensure the sustainability of public finances. In order to reconcile the freedom and responsibility of member states' fiscal policies, a balance must be struck in which the rules are simple enough to facilitate monitoring of compliance yet effective enough to mean that the need for cross-country bail-out measures is sufficiently rare. Our conclusion is that the new rules should emphasise the long-term debt sustainability target more clearly, while at the same time making its monitoring more effective through better short-term indicators, in particular the expenditure benchmark. We provide a proposal for a practical implementation option which is largely consistent with the current rules. At the same time, the expenditure benchmark should be reformed in order to further its countercyclical impact on fiscal policy, and it should replace the structural balance as the operational indicator of fiscal policy stance. Responsibility for economic policy decisions and their consequences should be fully restored to the Member States and the role of national supervisory bodies should be strengthened. Cross-country bail-out measures in times of crisis should be accompanied by strict conditionality that, in good times, the fiscal policy must be in line with the reformed EU framework.
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 Fiscal Policy in the European Union written by J. Ferreiro and published by Springer. This book was released on 2008-11-27 with total page 235 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book provides a comprehensive analysis of national fiscal policies in the European Union and in the European Monetary Union. Adopting a critical perspective, the book offers a deep insight into the consequences of the current strategy of national fiscal policies on economic activity.
