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.
This is an extensive study concerned with the potential effects of fiscal policy on financial markets in the EU. It takes into account the gradual liberalization of capital movements through Western Europe & the framework of the European ...
This book looks at the experience of 13 federal states to help inform the heated debate on this issue.
The book tackles a key issue for the European Union: Fiscal Federalism.
This book provides a comprehensive analysis of national fiscal policies in the European Union and in the European Monetary Union.
László Csaba, Acta Oeconomica This book explores the origins, rationale, problems and prospects of the European fiscal policy framework.
The papers collected in this volume are those presented at the sixteenth Colloquium arranged by the Societe Universitaire Europeenne de Re cherches Financieres (SUERF), which took place in Lisbon in May 1991.
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...
To what extent should local and regional governments in the European Union be allowed to determine their own fiscal policies? This book explores the core issues of fiscal federalism in the European context.
In this volume, a group of distinguished economists and political scientists analyze the political economy of European integration, evaluating recent developments in European monetary and fiscal policy.
This book explores the role of national fiscal policies in a selected group of Euro-area countries under the European Economic and Monetary Union (EMU).