Friday, July 1, 2011

Europe’s fiscal policy credibility problem

by Roel Beetsma, Benjamin Bluhm, Massimo Giuliodori and Peter Wierts

Vox

July 1, 2011

Fiscal policy in EU countries is suffering from a calamity of credibility. The fiscal figures get steadily worse as governments move from planning to implementation to retrospective reporting. In order to regain its reputation, this column argues that the EU should improve its fiscal institutions and the EU countries should take more ownership of EU fiscal rules.

On 29 September 2010 the European Commission presented six proposals for reinforcing economic governance and the European Council reached a political agreement on the package in March 2011. Negotiations with the European Parliament have started. The Council has set June 2011 as the target date for adoption. In principle, we should be approaching the moment that the final package will be made public. How should we evaluate the outcome?

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