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The role of the fiscal framework to foster public investment, including in light of the green and digital transitions

Author

Listed:
  • Sven Langedijk
  • Åsa Johannesson-Lindén
  • Paul Brans
  • Alessandra Cepparulo
  • Helena Hernnäs
  • Alexander Ioannidis
  • Clíona McDonnell
  • Philipp Mohl
  • Vito Ernesto Reitano

Abstract

This section discusses the role that the EU fiscal framework may play to promote public investment. It examines public investment developments in the EU since the mid-1990s and estimates of additional public and private investment needs up to 2030 for the green and digital transitions. The findings of a review of theoretical and empirical literature suggest that Member States public investment appears to have been adversely affected more by concerns on debt sustainability and related market pressures than by the EU fiscal rules. Still, the fiscal framework may provide stronger incentives to increase and sustain public investment, also during periods of fiscal consolidation. Considering the large additional investment needs to facilitate the green and digital transitions towards a resilient EU economy the section considers some elements that would strengthen the role of the fiscal framework in promoting public and private investment spending.

Suggested Citation

  • Sven Langedijk & Åsa Johannesson-Lindén & Paul Brans & Alessandra Cepparulo & Helena Hernnäs & Alexander Ioannidis & Clíona McDonnell & Philipp Mohl & Vito Ernesto Reitano, 2023. "The role of the fiscal framework to foster public investment, including in light of the green and digital transitions," Quarterly Report on the Euro Area (QREA), Directorate General Economic and Financial Affairs (DG ECFIN), European Commission, vol. 21(4), pages 37-48, February.
    • Handle: RePEc:euf:qreuro:0214-03
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