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Towards expenditure rules and fiscal sanity in the euro area

Sebastian Hauptmeier, Antonio Jesus Sanchez Fuentes () and Ludger Schuknecht ()

No 1266, Working Paper Series from European Central Bank

Abstract: The study looks at primary expenditure developments in the euro area, its three largest members and four “macro-imbalances” countries for the period 1999-2009. It compares actual expenditure trends with those that would have prevailed if countries had followed neutral policies based on expenditure rules since the start of EMU. It also calculates the implications for debt trends. It finds that, all sample countries except Germany applied expansionary expenditure policies. This resulted in much higher expenditure and debt paths compared to a counterfactual neutral expenditure stance. Simple and prudent rules-based spending policies could have led to much safer fiscal positions much more in line with the EU’s Stability and Growth Pact rules. JEL Classification: E17, E61, E65, H50, H60

Keywords: Expenditure policies; expenditure rules; fiscal stance; public debt; Sustainability (search for similar items in EconPapers)
Date: 2010-11
New Economics Papers: this item is included in nep-cba and nep-eec
Note: 538998
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Journal Article: Towards expenditure rules and fiscal sanity in the euro area (2011) Downloads
Working Paper: Towards Expenditure Rules and Fiscal Sanity in the Euro Area (2011) Downloads
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