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Euro-Area Fiscal Stance: From Theory to Practical Implementation

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  • Agnes Benassy-Quere

Abstract

Despite large automatic stabilizers, the performance of the Euro area as a whole in terms of fiscal stabilization is relatively poor. This report argues that a meaningful fiscal stance for the Euro area should rely on the current account as a complement to the output gap, and be coordinated only in “exceptional” times, the usual bottom-up approach of fiscal policy remaining appropriate for “normal” times. In such setting, the European Fiscal Board would play a key role in advising the Commission on the existence of “exceptional” circumstances, on the adequate aggregate fiscal stance and on its desirable distribution across member states.

Suggested Citation

  • Agnes Benassy-Quere, 2016. "Euro-Area Fiscal Stance: From Theory to Practical Implementation," CESifo Working Paper Series 6040, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_6040
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    File URL: http://www.cesifo-group.de/DocDL/cesifo1_wp6040.pdf
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    References listed on IDEAS

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    1. Roel Beetsma & Massimo Giuliodori & Franc Klaassen, 2006. "Trade spill-overs of fiscal policy in the European Union: a panel analysis," Economic Policy, CEPR;CES;MSH, vol. 21(48), pages 639-687, October.
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    More about this item

    Keywords

    fiscal stance; coordination of fiscal policies; euro area; European Fiscal Board;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • F45 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Macroeconomic Issues of Monetary Unions

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