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The Reform of the European Fiscal Rules: In Search of Mechanisms Ensuring Sustainable Debt Levels

Author

Listed:
  • de Haan Jakob

    (University of Groningen, Groningen, The Netherlands)

  • Amtenbrink Fabian

    (Erasmus University, Rotterdam, The Netherlands)

Abstract

Central to the recent European Commission’s proposals for the reform of the current fiscal rules is the introduction of national medium-term fiscal structural plans. The proposed emphasis on compliance with country-specific net expenditure trajectories aimed at government debt sustainability is to be welcomed. However, several details of this expenditure path are either not clear or run the risk of political manipulation. What is more, maintaining the one-size fits all 3 % threshold for the budget balance undermines several of the acclaimed advantages of the proposed new governance system, including that it would be simpler and less pro-cyclical. Furthermore, enforcement under the proposed framework is also unlikely to be stronger than under the current framework. Last, but not least, the proposal does not discuss the need for an EU framework for debt restructuring.

Suggested Citation

  • de Haan Jakob & Amtenbrink Fabian, 2023. "The Reform of the European Fiscal Rules: In Search of Mechanisms Ensuring Sustainable Debt Levels," The Economists' Voice, De Gruyter, vol. 20(2), pages 169-178, December.
    • Handle: RePEc:bpj:evoice:v:20:y:2023:i:2:p:169-178:n:5
    DOI: 10.1515/ev-2023-0063
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    References listed on IDEAS

    as
    1. European Fiscal Board (EFB), 2019. "Assessment of EU fiscal rules with a focus on the six and two-pack legislation," Reports 2019, European Fiscal Board.
    2. Jeromin Zettelmeyer & Christoph Trebesch & Mitu Gulati, 2013. "The Greek debt restructuring: an autopsy [Greek bond buyback boondoggle]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 28(75), pages 513-563.
    3. Clemens Fuest & Friedrich Heinemann & Christoph Schröder, 2016. "A Viable Insolvency Procedure for Sovereigns in the Euro Area," Journal of Common Market Studies, Wiley Blackwell, vol. 54(2), pages 301-317, March.
    4. repec:oup:ecpoli:v:28:y:2013:i:75:p:513-563 is not listed on IDEAS
    5. Francesca Caselli & Mr. Philippe Wingender, 2018. "Bunching at 3 Percent: The Maastricht Fiscal Criterion and Government Deficits," IMF Working Papers 2018/182, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    stability and growth pact; economic governance; European Union; debt sustainability; expenditure rule; debt restructuring;
    All these keywords.

    JEL classification:

    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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