A new framework for fiscal policy consolidation in Europe
AbstractCurrent developments in Greece make clear that the rules of the European Stability and Growth Pact (SGP) were neither strict enough nor enforced strictly enough. To deal with the ongoing fiscal exit and its related phenomena of crisis, we propose a new framework for fiscal policy consolidation in Europe. Centre stage takes a European Consolidation Pact (ECP) supplementing the SGP, with five distinguishing features. First, members are obliged to detail a path to balancing their budgets, including a concrete course to cutting non-cyclical government expenditure, and second to implement an automatic tax increase law in case of straying from the defined path. Third, pact members may apply for ECP guarantees for each newly issued government debt that is in line with the specified path. These guarantees are, fourth, paid for by a percentage fee. Fifth, non-compliance with the automatic tax increase law or voluntary exit from the consolidation pact leaves future government bond issues without ECP guarantees: either the country does not need the guarantee any longer, or it is willing to default. In the latter case, the new framework spells out the details of an orderly government default. --
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Springer in its journal Intereconomics.
Volume (Year): 45 (2010)
Issue (Month): 4 (July)
Contact details of provider:
Web page: http://www.springerlink.com/link.asp?id=113472
Other versions of this item:
- Bofinger, Peter & Ried, Stefan, 2010. "A new framework for fiscal policy consolidation in Europe," Working Papers 03/2010, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung.
- E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
- F5 - International Economics - - International Relations, National Security, and International Political Economy
- H6 - Public Economics - - National Budget, Deficit, and Debt
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kenneth Rogoff, 1999.
"International Institutions for Reducing Global Financial Instability,"
NBER Working Papers
7265, National Bureau of Economic Research, Inc.
- Kenneth Rogoff, 1999. "International Institutions for Reducing Global Financial Instability," Journal of Economic Perspectives, American Economic Association, vol. 13(4), pages 21-42, Fall.
- Ugo Panizza & Federico Sturzenegger & Jeromin Zettelmeyer, 2009. "The Economics and Law of Sovereign Debt and Default," Journal of Economic Literature, American Economic Association, vol. 47(3), pages 651-98, September.
- Andreas Sachs, 2013. "Governance Structures in Europe," WWWforEurope Deliverables series 2, WWWforEurope.
- Gustav A. Horn & Torsten Niechoj & Silke Tober & Till van Treeck & Achim Truger, 2010. "Reform des StabilitÃ¤ts- und Wachstumspakts: Nicht nur Ã¶ffentliche, auch private Verschuldung zÃ¤hlt," IMK Report, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute 51-2010, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
- Bas van Aarle, 2013. "Surveillance and Control of Fiscal Consolidation on a Supranational Level," WWWforEurope Working Papers series 46, WWWforEurope.
- ÃrpÃ¡d KovÃ¡cs & PÃ©ter Halmosi, 2012. "Similarities and Differences in European Crisis Management," Public Finance Quarterly, State Audit Office of Hungary, State Audit Office of Hungary, vol. 57(1), pages 9-27.
- Colignatus, Thomas, 2011. "Conditions for turning the ex ante risk premium into an ex post redemption for EU government debt," MPRA Paper 34816, University Library of Munich, Germany, revised 17 Nov 2011.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.