The Stability and Growth Pact since 2011: More complex – but also stricter and less procyclical?

Doris Prammer and Lukas Reiss ()
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Lukas Reiss: Oesterreichische Nationalbank, Economic Analysis Division

Monetary Policy & the Economy, 2016, issue 1, 33–53

Abstract: The European fiscal framework has been extensively reformed since 2011. Nevertheless, it is consistently criticized for its procyclicality, its complexity and its large consolidation requirements. We provide a general overview of European fiscal rules. Then we argue that while recent reforms have undoubtedly made the Stability and Growth Pact more complex, one cannot make such a general statement concerning its procyclicality and its strictness. The preventive arm of the SGP has been made both stricter and less procyclical, while the newly introduced debt benchmark is not only very complex, but also more procyclical than the rest of the SGP. Furthermore, the effect on the procyclicality of Excessive Deficit Procedures is ambivalent; procyclicality was increased by the introduction of intermediate headline targets, but also decreased via new effective action indicators.

Keywords: Stability and Growth Pact; fiscal rules; fiscal policy (search for similar items in EconPapers)
JEL-codes: E61 E62 H60 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (5)

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