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High-level roundtable on the optimal design of fiscal consolidation programmes

Conference hosted by the ECB

8 April 2013, Frankfurt am Main



Session chair

Benoît Cœuré (ECB)


The risk to fiscal sustainability entailed in the sovereign debt crisis has made fiscal consolidation inevitable in most euro area countries. At the same time, some countries have seen economic activity plummet and unemployment rise to alarming levels. Moreover, there is an urgent need for deleveraging in other sectors of the economies.

  • What is the best strategy to safeguard fiscal sustainability?
  • How quickly should fiscal consolidation be conducted in such cases?
  • Under what circumstances could frontloaded consolidation be self-defeating or possibly even lead to a vicious downward spiral?
  • What are the risks of a backloaded adjustment?
  • How can one ensure that backloading does not lead to a delayed adjustment?
  • In a low-growth environment, which is typical in the aftermath of financial crises, can backloading lead to debt dynamics getting out of control?
  • Is backloading a credible option in the absence of a strong pre-commitment to medium-term adjustment plans?
  • What is the optimal interaction with other policies?
10 a.m. Fiscal consolidation: (more) now or (more) later?
Olivier Blanchard (International Monetary Fund) presentation
10.30 a.m. Fiscal backing: a long view
Eric Leeper (Indiana University) presentation
11 a.m. Roundtable discussion I
12 p.m. Lunch
Hosted by Vítor Constâncio (ECB)

Session chair

Peter Praet (ECB)


Fiscal consolidation can be achieved by various means. The design of the adjustment should be effective in terms of achieving the consolidation objective, while minimising welfare losses and respecting fairness considerations.

  • What composition of fiscal consolidation measures is best suited to achieving these objectives?
  • How is it best to weigh up the short and long-run effects of alternative adjustment strategies?
  • How do the composition and quality of fiscal consolidation measures affect their credibility?
  • How does fiscal consolidation interact with structural reforms?
1.30 p.m. Fiscal adjustments: what do we know? (part 1)
Alberto Alesina (Harvard University) presentation
The output effect of fiscal adjustments (part 2)
Carlo Favero (Bocconi University) presentation
2 p.m. How much scope for growth- and equity-friendly consolidation?
Pier Carlo Padoan (Organisation for Economic Co-operation and Development) presentation
2.30 p.m. Roundtable discussion II
3.30 p.m. Coffee

Session chair

Mario Draghi (ECB)


Fiscal consolidation in Europe generally needs to be assessed in the context of the EU fiscal governance framework. Many countries are still subject to an excessive deficit procedure and are required to bring their deficits below 3% within certain deadlines. The design of the fiscal consolidation measures is also affected by additional elements of the Stability and Growth Pact, such as the expenditure rule and the equal footing of the debt criterion with the deficit criterion.

  • How should the governance framework be implemented in challenging times in order to preserve and solidify its credibility, and thereby contribute to the smooth functioning of Economic and Monetary Union?
  • What are the roles of nominal versus structural targets?
4 p.m. Fiscal governance framework: the importance of credibility
Frank Smets (ECB) presentation
4.20 p.m. Implementing the European fiscal governance framework
Marco Buti (European Commission), presentation
4.40 p.m. Roundtable discussion III