Reforming the European fiscal rules: old wine in new bottles?
A monetary union cannot deliver price stability without sustainable public finances in every single member state. This was well understood by the Delors Committee, which provided the intellectual underpinning of the Maastricht treaty in 1992. Maastricht’s logic (embedded in an EU Regulation known as the Stability and Growth Pact) was that simple and enforceable fiscal rules should prevent the kind of gross fiscal errors that could put the survival of the common currency at risk. Have these rules delivered? The evidence is mixed at best, although most would agree that for many countries, the state of public finances would have been worse without those rules. Still, designing and implementing fiscal rules is so hard that the framework is about to undergo its third wave of major reforms.
A renowned economic scholar, former Director General of ECFIN and now chief of staff of Commissioner Paolo Gentiloni, Marco Buti has a truly unique experience in thinking about how to achieve the desirable degree of fiscal policy coordination through fiscal rules. He will share his thoughts on the experience with the Maastricht rules, and on how to make them work better for the good of all Europeans.
Xavier Debrun, NBB’s Head of Economics and Research and member of the European Fiscal Board, will then provide his own insights on the various mutations of the European fiscal rules and on their desirable evolution going forward.