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How to Reform Europe’s Fiscal Policy Framework

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  • Lars Calmfors
  • Giancarlo Corsetti

Abstract

The current budgetary problems of some EU member states have intensified the debate on Europe’s fiscal policy framework. It is not enough to change the interpretation of the Stability and Growth Pact. More fundamental revisions of the EU Treaty are needed in order to strike a reasonable balance between longrun sustainability and short-run flexibility. The ceiling on budget deficits should be conditioned on the government debt level, such that the scope for stabilisation policy in downswings is increased in low-debt countries. In addition, the enforcement of the rules should be depoliticised: decisions on sanctions against states violating the rules should be transferred from the political level of the Council of Ministers to the judicial level of the European Court of Justice.

Suggested Citation

  • Lars Calmfors & Giancarlo Corsetti, 2003. "How to Reform Europe’s Fiscal Policy Framework," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 4(1), pages 109-116, January.
  • Handle: RePEc:wej:wldecn:130
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    Cited by:

    1. Francesco Saraceno & Paola Veroni, 2005. "Reform of the Stability and Growth Pact: Reducing or Increasing the Nuisance," Sciences Po publications 2005-1, Sciences Po.
    2. Roel M. W. J. Beetsma & Xavier Debrun, 2005. "Implementing the Stability and Growth Pact; Enforcement and Procedural Flexibility," IMF Working Papers 05/59, International Monetary Fund.
    3. repec:spo:wpecon:info:hdl:2441/2842 is not listed on IDEAS
    4. Amy K. Filipek & Till Schreiber, 2010. "The Stability and Growth Pact: Past Performance and Future Reforms," Working Papers 97, Department of Economics, College of William and Mary.

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