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Debt sustainability analysis: Assessing its use in the EU's new fiscal rules

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  • Wieland, Volker

Abstract

A large share of euro area member states is highly indebted. On average, their debt ratios have experienced a strong and continued upward trend that needs to be reversed. The debt sustainability analysis in the new fiscal rules provides great flexibility to member states but exhibits weaknesses with regard to transparency, robustness and credibility. Stress testing needs to be enhanced and applied to the adjustment period. This document was provided/prepared by the Economic Governance and EMU Scrutiny Unit at the request of the ECON Committee.

Suggested Citation

  • Wieland, Volker, 2024. "Debt sustainability analysis: Assessing its use in the EU's new fiscal rules," IMFS Working Paper Series 223, Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS).
    • Handle: RePEc:zbw:imfswp:333883
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    1. Zsolt Darvas & Lennard Welslau & Jeromin Zettelmeyer, 2024. "The implications of the European Union’s new fiscal rules," Bruegel Policy Brief node_10095, Bruegel.
    2. Feld, Lars P. & Fuest, Clemens & Haucap, Justus & Schweitzer, Heike & Wieland, Volker & Wigger, Berthold U., 2021. "The monetary policy strategy of the European Central Bank: Review and recommendations," Kronberger Kreis-Studien 67e, Stiftung Marktwirtschaft / The Market Economy Foundation, Berlin.
    3. Luc Eyraud & Xavier Debrun & Andrew Hodge & Victor Duarte Lledo & Catherine A Pattillo, 2018. "Second-Generation Fiscal Rules; Balancing Simplicity, Flexibility, and Enforceability," IMF Staff Discussion Notes 18/04, International Monetary Fund.
    4. Warmedinger, Thomas & Checherita-Westphal, Cristina & Drudi, Francesco & Setzer, Ralph & De Stefani, Roberta & Bouabdallah, Othman & Westphal, Andreas, 2017. "Debt sustainability analysis for euro area sovereigns: a methodological framework," Occasional Paper Series 185, European Central Bank.
    5. Mr. Luc Eyraud & Mr. Xavier Debrun & Andrew Hodge & Victor Duarte Lledo & Ms. Catherine A Pattillo, 2018. "Second-Generation Fiscal Rules: Balancing Simplicity, Flexibility, and Enforceability," IMF Staff Discussion Notes 2018/004, International Monetary Fund.
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