1. Home
  2. Studies
  3. On Reforming the Stability and Growth Pact: Stocktaking and Proposals for More Fiscal Discipline in Europe
Berthold Busch / Björn Kauder IW-Analyse No. 142 3. March 2021 On Reforming the Stability and Growth Pact: Stocktaking and Proposals for More Fiscal Discipline in Europe

The member states of the Eurozone are countering the economic impact of the Covid 19 pandemic with heavy spending. In response to this exceptional situation the rules of the Stability and Growth Pact have been temporarily suspended.

Download PDF
Stocktaking and Proposals for More Fiscal Discipline in Europe
Berthold Busch / Björn Kauder IW-Analyse No. 142 3. March 2021

On Reforming the Stability and Growth Pact: Stocktaking and Proposals for More Fiscal Discipline in Europe

IW-Analyse

Download PDF

Share this article:

or copy the following link:

The link was added to your clipboard!

The member states of the Eurozone are countering the economic impact of the Covid 19 pandemic with heavy spending. In response to this exceptional situation the rules of the Stability and Growth Pact have been temporarily suspended.


In the long run, however, economic and monetary union will not be able to function without effective controls, and especially without rules for a sustainable fiscal policy to prevent disarray in public finances causing crises in the member states. Overall, the Pact has not fulfilled its aim, a failure especially evident in the case of sovereign debt, which in some countries is so high as to leave little scope for additional borrowing. This state of affairs has largely shaped discussion of the form that aid for the countries particularly affected by the economic consequences of the Corona pandemic should take. There is widespread agreement that the regulations of the Stability and Growth Pact have become too confusing and too complicated, so that reforms are needed. One approach could be to orient government spending on medium-term growth in potential output in conjunction with a debt ratio target and a roadmap for how to reach it.

 

 

Download PDF
Stocktaking and Proposals for More Fiscal Discipline in Europe
Berthold Busch / Björn Kauder IW-Analyse No. 142 3. March 2021

Berthold Busch / Björn Kauder: Der Stabilitäts- und Wachstumspakt – Bestandsaufnahme und Vorschläge für mehr fiskalpolitische Disziplin in Europa

IW-Analyse

Download PDF

Share this article:

or copy the following link:

The link was added to your clipboard!

More on the topic

Read the article
How can recovery and structural change succeed?
Sandra Parthie Event 10. November 2021

EU’s Economy after Corona: How can recovery and structural change succeed?

With „NextGenerationEU”, the EU provides comprehensive grants and loans for public investments and reforms in its Member States. At least 37% of the overall amount should be spend on forward-looking investments and structural reforms in favour of climate ...

IW

Read the article
Adriana Neligan Event 6. October 2021

Sustainable Finance: How to finance and achieve global decarbonisation

As governments across the world continue to face the challenge of tackling Covid-19, the current crisis also presents an unprecedented opportunity to reboot global economies in a manner that builds more sustainable, inclusive, and resilient societies, in line ...

IW

More about this topic

Content element with id 8880 Content element with id 9713