by Massimo Bordignon (UCSC & EFB) and Giuseppe Pisauro (UPB)
It is not only a matter of reforming the fiscal rules. There is a more general necessity to revise the economic governance of the European Union (EU) taking account of:
- New challenges (e.g. large crises hitting repeatedly the EU economy in the last decade and the need for large future investment spending to address climate changes and energy transition; Buti, 2021).
- New economic conditions (lower growth rates and lower interest rates that put debt sustainability concerns in a different light and requires structurally a more active fiscal policy; Blanchard et al., 2020; Buti and Messori, 2021).
- Past negative experience (in terms of EU economic governance and coordination of national fiscal policies).
- New common tools, in particular the Ng-EU program, introduced to fight the pandemics. This program and particularly its main component, the Recovery and Resilience facility (R&R), does not only address a specific problem, the recovery and convergence of the EU economies after the Covid pandemic, but provides a template for an effective re-definition of the EU’s economic governance,including the new European fiscal rules.
In this context: Why change the fiscal rules?
(Astrid Paper 82 , Dicembre 2021)