
The European Fiscal Compact: A Counterfactual Assessment
The European Fiscal Compact: A Counterfactual Assessment
- Jé rô me Creel Paul Hubert Francesco Saraceno
- 세종대학교 경제통합연구소
- Journal of Economic Integration
- 제27권 제4호
- 등재여부 : KCI등재
- 2012.12
- 537 - 563 (27 pages)
Faced with the global financial crisis and an increasingly worrisome sovereign-debt crisis, the Eurozone countries are rethinking their fiscal governance. This paper discusses the different reforms and subsequent fiscal rules which have emerged since 2011. It assesses the impact of fiscal rules on the output gap and inflation rate of three representative countries of the Eurozone. By means of a counterfactual, the rules based upon their macroeconomic outcomes are ranked. The new debt reduction rule would certainly lead to lower debt levels, hence to larger fiscal margins for maneuver in the future but, in steep contrast with the golden rule of public finance, it would be very costly to implement as the requirement to enforce a substantial consolidation in the short run would be considerably higher than that of a golden rule and would worsen the output gap and inflation rate. The cap on the cyclically adjusted deficit also leads to unfavorable outcomes whereas the Maastricht status quo, limiting overall public deficit, would be a second best behind the golden rule of public finance.
Ⅰ. Introduction
Ⅱ. A Critical Appraisal of the New EU Governance Reforms
Ⅲ. Assessing the Impact of Four Fiscal Rules
Ⅳ. Conclusion