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Euro-Area Fiscal Stance: From Theory to Practical Implementation

Listed author(s):
  • Agnes Benassy-Quere

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.

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File URL: http://www.cesifo-group.de/DocDL/cesifo1_wp6040.pdf
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 6040.

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Date of creation: 2016
Handle: RePEc:ces:ceswps:_6040
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  14. Marco Fioramanti, ISTAT & Laura González Cabanillas & Bjorn Roelstraete & Salvador Adrian Ferrandis Vallterra, 2016. "European Commission's Forecasts Accuracy Revisited: Statistical Properties and Possible Causes of Forecast Errors," European Economy - Discussion Papers 2015 - 027, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
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