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Applying nominal expenditure rules in the euro area

Author

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  • Clemens Fuest
  • Daniel Gros

Abstract

In the debate on euro area fiscal governance, the current deficit rules of the EU have repeatedly been criticised to have a pro-cyclical effect, leading to overly lax fiscal policies in good times and a too restrictive regime in bad times. An analysis by EconPol researchers Clemens Fuest (ifo) and Daniel Gros (CEPS) shows that most major EU countries are over-spending at a level not compatible with spending rules for sustainable public finances.

Suggested Citation

  • Clemens Fuest & Daniel Gros, 2019. "Applying nominal expenditure rules in the euro area," EconPol Policy Brief 15, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    • Handle: RePEc:ces:econpb:_15
    as

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    File URL: https://www.ifo.de/DocDL/EconPol_Policy_Brief_15_Expenditure_rules.pdf
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    References listed on IDEAS

    as
    1. Grégory Claeys & Zsolt Darvas & Alvaro Leandro, 2016. "A proposal to revive the European Fiscal Framework," Policy Contributions 13490, Bruegel.
    2. Clemens Fuest & Friedrich Heinemann, 2017. "Accountability Bonds – Reconciling Fiscal Policy Based on Market Discipline with Financial Stability," EconPol Policy Brief 03, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    3. Till Cordes & Mr. Tidiane Kinda & Ms. Priscilla S Muthoora & Miss Anke Weber, 2015. "Expenditure Rules: Effective Tools for Sound Fiscal Policy?," IMF Working Papers 2015/029, International Monetary Fund.
    4. Clemens Fuest & Friedrich Heinemann, 2017. "Accountability Bonds – Reconciling Fiscal Policy Based on Market Discipline with Financial Stability," EconPol Policy Brief 3, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
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    Cited by:

    1. Jost, Thomas & Tödter, Karl-Heinz, 2021. "Reducing sovereign debt levels in the post-Covid Eurozone with a simple deficit rule," IMFS Working Paper Series 164, Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS).

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