Stephan Haroutunian
- 30 April 2025
- ECONOMIC BULLETIN - ARTICLEEconomic Bulletin Issue 3, 2025Details
- Abstract
- This article analyses the medium-term fiscal-structural plans that euro area countries have submitted under the revised Stability and Growth Pact. It discusses the fiscal and economic implications of this framework over the short and medium term, also factoring in – on a preliminary basis and acknowledging the major uncertainty ahead – the recent proposal by the European Commission to activate the national escape clause in the Stability and Growth Pact in a coordinated manner. The EU’s new economic governance framework builds on the premise that fiscal sustainability, reforms and investment are mutually reinforcing and should be fostered as part of an integrated approach. The article emphasises the importance of launching the new framework effectively and ensuring appropriate monitoring of reform and investment commitments in the plans. This is also necessary to ensure that additional spending on defence does not endanger fiscal sustainability in the medium term.
- JEL Code
- H11 : Public Economics→Structure and Scope of Government→Structure, Scope, and Performance of Government
H50 : Public Economics→National Government Expenditures and Related Policies→General
H54 : Public Economics→National Government Expenditures and Related Policies→Infrastructures, Other Public Investment and Capital Stock
H60 : Public Economics→National Budget, Deficit, and Debt→General
H68 : Public Economics→National Budget, Deficit, and Debt→Forecasts of Budgets, Deficits, and Debt
- 24 May 2024
- OCCASIONAL PAPER SERIES - No. 349Details
- Abstract
- This paper reviews the main arguments underpinning the reform of the EU’s fiscal framework, which has culminated in the adoption by the EU legislators of a revised set of rules for the European economic governance including the Stability and Growth Pact (SGP). It takes a chronological approach by first discussing the Commission’s legislative proposals of April 2023 against the pre-reform set of fiscal rules, before assessing the final political agreement which has materialised in the revised set of rules. In view of the multi-dimensional reform outcome, it is argued that the success of the reform of the fiscal framework will ultimately depend on its future implementation by the Commission and the Council. Combining the reform of the fiscal rules with better fiscal coordination through the establishment of a permanent euro area fiscal capacity was not proposed in the context of this reform. This paper argues that completing the architecture of Economic and Monetary Union (EMU) is an important missing element and should remain a policy priority.
- JEL Code
- H6 : Public Economics→National Budget, Deficit, and Debt
H11 : Public Economics→Structure and Scope of Government→Structure, Scope, and Performance of Government
H50 : Public Economics→National Government Expenditures and Related Policies→General
- 10 January 2023
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 8, 2022Details
- Abstract
- This box discusses fiscal policy orientation in 2023 in the context of the ongoing European Semester.
- JEL Code
- E62 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Fiscal Policy
H6 : Public Economics→National Budget, Deficit, and Debt
- 14 March 2022
- WORKING PAPER SERIES - No. 2656Details
- Abstract
- Regarding a prospective reform of the European Stability and Growth Pact (SGP) it seems rather consensual that a simplified framework should take account of the prevailing macroeconomic context and enhance the balancing of sustainability and stabilisation considerations. This paper provides simulation analysis for the euro area and individual countries with a view to assessing the short- and longer-term budgetary and macroeconomic implications of a move to a two-tier system with an expenditure growth rule as single operational indicator linked to a debt anchor. Compared to the status quo, our analysis suggests that expenditure growth targets which take account of the ECB’s symmetric 2% inflation target can improve the cyclical properties of the framework. Fiscal policy would be tighter when inflation is above the target but looser when inflation is below target, resulting in a better synchronisation of fiscal and monetary policies. Providing additional fiscal accommodation in a low inflation environment would enable monetary policy to operate more effectively especially in the vicinity of the effective lower bound. The link to a longer-term debt anchor at the same time ensures a transition towards the Treaty’s debt reference level.
- JEL Code
- E63 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Comparative or Joint Analysis of Fiscal and Monetary Policy, Stabilization, Treasury Policy
H50 : Public Economics→National Government Expenditures and Related Policies→General
H60 : Public Economics→National Budget, Deficit, and Debt→General
- 13 January 2022
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 8, 2021Details
- Abstract
- This box discusses the fiscal policy recommendations addressed to the euro area countries against the background of the coronavirus (COVID-19) crisis.
- JEL Code
- E62 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Fiscal Policy
H6 : Public Economics→National Budget, Deficit, and Debt
- 21 September 2021
- OCCASIONAL PAPER SERIES - No. 273Details
- Abstract
- The last review of the ECB’s monetary policy strategy in 2003 followed a period of predominantly upside risks to price stability. Experience following the 2008 financial crisis has focused renewed attention on the question of how monetary and fiscal policy should best interact, in particular in an environment of structurally low interest rates and persistent downside risks to price stability. This debate has been further intensified by the economic impact of the coronavirus (COVID-19) pandemic. In the euro area, the unique architecture of a monetary union consisting of sovereign Member States, with cross-country heterogeneities and weaknesses in its overall construction, poses important challenges. Against this background, this report revisits monetary-fiscal policy interactions in the euro area from a monetary policy perspective and with a focus on the ramifications for price stability and maintaining central bank independence and credibility. The report consists of three parts. The first chapter presents a conceptual framework for thinking about monetary-fiscal policy interactions, thereby setting the stage for a discussion of specifically euro area aspects and challenges in subsequent parts of the report. In particular, it reviews the main ingredients of the pre-global financial crisis consensus on monetary-fiscal policy interactions and addresses significant new insights and refinements which have gained prominence since 2003. In doing so, the chapter distinguishes between general conceptual aspects – i.e. those aspects that pertain to an environment characterised by a single central bank and a single fiscal authority and those aspects that pertain to an environment characterised by a single central bank and many fiscal authorities (a multi-country monetary union). ...
- JEL Code
- E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
E62 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Fiscal Policy
E63 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Comparative or Joint Analysis of Fiscal and Monetary Policy, Stabilization, Treasury Policy
F45 : International Economics→Macroeconomic Aspects of International Trade and Finance
- 24 June 2021
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 4, 2021Details
- Abstract
- This box examines the fiscal policy developments outlined in the 2021 stability programmes.
- JEL Code
- E62 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Fiscal Policy
H6 : Public Economics→National Budget, Deficit, and Debt
- 2 February 2021
- ECONOMIC BULLETIN - ARTICLEEconomic Bulletin Issue 1, 2021Last updated on 10 February 2021Details
- Abstract
- Euro area countries have relied extensively on fiscal policy to counter the harmful impact of the coronavirus (COVID-19) pandemic on their economies. They have implemented a broad range of measures, some with an immediate budgetary impact and others, such as liquidity measures, which, in principle, are not expected to cause an immediate deterioration in the fiscal outlook. Since all euro area countries were hit by the economic shock largely through the same channels, their fiscal responses in the early stages of the crisis were similar in terms of the instruments used. Fiscal emergency packages were mostly aimed at limiting the economic fallout from containment measures through direct measures to protect firms and workers in the affected industries. Simultaneously, extensive liquidity support measures in the form of tax deferrals and State guarantees were announced to help firms particularly impacted by the containment policies to avoid liquidity shortages. In order to support the recovery, fiscal policy needs to provide targeted and mostly temporary stimulus, tailored to the specific characteristics of the crisis and countries’ fiscal positions. Government investments, complemented by the Next Generation EU package, and accompanied by appropriate structural policies, should play a major role in this respect.
- JEL Code
- H6 : Public Economics→National Budget, Deficit, and Debt
H1 : Public Economics→Structure and Scope of Government
H5 : Public Economics→National Government Expenditures and Related Policies
- 7 January 2021
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 8, 2020Details
- Abstract
- This box examines the fiscal policy recommendations addressed to the euro area countries against the background of the COVID-19 crisis.
- JEL Code
- E62 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Fiscal Policy
H6 : Public Economics→National Budget, Deficit, and Debt
- 18 June 2020
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 4, 2020Details
- Abstract
- This box examines fiscal measures taken at the level of euro area countries and the EU in response to the coronavirus (COVID-19) crisis.
- JEL Code
- E62 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Fiscal Policy
H6 : Public Economics→National Budget, Deficit, and Debt
- 27 December 2019
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 8, 2019Details
- Abstract
- This box informs about the review of draft budgetary plans for 2020 and derives some implications for a reform of fiscal governance. To this end, it also identifies weaknesses in the review exercise notably with respect to the follow-up of recommendations by the Council that the budgetary plans are supposed to entail. It would be important that such shortcomings be addressed, inter alia, in the Commission’s forthcoming review of the “six-pack” and “two-pack” regulations, which were implemented in 2011 and 2013 respectively, in the aim of strengthening fiscal governance.
- JEL Code
- H11 : Public Economics→Structure and Scope of Government→Structure, Scope, and Performance of Government
H50 : Public Economics→National Government Expenditures and Related Policies→General
H6 : Public Economics→National Budget, Deficit, and Debt
- 8 August 2019
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 5, 2019Details
- Abstract
- This box examines the fiscal policy recommendations addressed to the euro area countries against the background of downside risks to the outlook for a continued economic expansion. The examination shows that in countries with high levels of government debt, building buffers to strengthen resilience in cyclical downturns remains a priority for fiscal policies. At the same time, countries that have achieved sound fiscal positions could utilise some fiscal space for measures to support economic growth.
- JEL Code
- E62 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Fiscal Policy
H6 : Public Economics→National Budget, Deficit, and Debt
- 27 December 2018
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 8, 2018Details
- Abstract
- On 21 November 2018 the European Commission released its opinions on the draft budgetary plans (DBPs) of euro area governments for 2019, together with an analysis of the budgetary situation in the euro area as a whole. Each opinion includes an assessment of the compliance of the relevant plan with the Stability and Growth Pact (SGP). This exercise is important as it assesses whether countries have incorporated into their plans the country-specific recommendations for fiscal policies that were addressed to them under the 2018 European Semester, as adopted by the Economic and Financial Affairs Council on 13 July 2018. These recommendations propose, among other things, that countries with high ratios of government debt to GDP aim for a sufficiently fast reduction in indebtedness. This would raise their resilience in a future economic downturn.
- JEL Code
- H60 : Public Economics→National Budget, Deficit, and Debt→General
H68 : Public Economics→National Budget, Deficit, and Debt→Forecasts of Budgets, Deficits, and Debt
- 28 June 2018
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 4, 2018Details
- Abstract
- On 23 May the European Commission issued its 2018 European Semester Spring Package of policy recommendations for Member States. The package includes country-specific recommendations (CSRs) for economic and fiscal policies for all EU Member States. It also covers recommendations regarding the implementation of the European Union's Stability and Growth Pact (SGP) for a number of countries. With regard to fiscal policies, the recommendations focus in particular on Member States' compliance with the SGP on the basis of the Commission's 2018 spring forecast and the Commission's assessment of countries' policy plans as reflected in the updates of the stability and convergence programmes released in April. This year's European Semester exercise is important particularly with a view to avoiding any repetition of mistakes made prior to the financial crisis when sufficient fiscal buffers were not built up in economic good times and the ensuing recession was aggravated by the sudden necessity of pro-cyclical fiscal tightening. Against this background, this box examines the fiscal policy recommendations that are addressed to 18 euro area countries (i.e. excluding Greece).
- JEL Code
- H60 : Public Economics→National Budget, Deficit, and Debt→General
H68 : Public Economics→National Budget, Deficit, and Debt→Forecasts of Budgets, Deficits, and Debt
- 28 December 2017
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 8, 2017
- 3 November 2014
- OCCASIONAL PAPER SERIES - No. 156Details
- Abstract
- This paper reviews potential output from a euro area perspective by summarising the developments according to international institutions and assessing the impact of the crisis. The paper also considers the methodological basis for potential output estimates, and the high degree of uncertainty that surrounds them. Although it is too early to see the full effects of structural reforms implemented since 2007/08, further structural reforms are needed to support euro area potential growth, especially in view of the negative impact that population ageing is expected to have on potential growth in the future.
- JEL Code
- E23 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Production
E25 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Aggregate Factor Income Distribution
E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Business Fluctuations, Cycles
E37 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Forecasting and Simulation: Models and Applications
O49 : Economic Development, Technological Change, and Growth→Economic Growth and Aggregate Productivity→Other
- 9 January 2009
- OCCASIONAL PAPER SERIES - No. 100Details
- Abstract
- The first part of this paper provides a brief survey of the recent literature that employs survey data on household finance and consumption. Given the breadth of the topic, it focuses on issues that are particularly relevant for policy, namely: i) wealth effects on consumption, ii) housing prices and household indebtedness, iii) retirement income, consumption and pension reforms, iv) access to credit and credit constraints, v) financial innovation, consumption smoothing and portfolio selection and vi) wealth inequality. The second part uses concrete examples to summarise how results from such surveys feed into policy-making within the central banks that already conduct such surveys.
- JEL Code
- C42 : Mathematical and Quantitative Methods→Econometric and Statistical Methods: Special Topics→Survey Methods
D12 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Empirical Analysis
D14 : Microeconomics→Household Behavior and Family Economics→Household Saving; Personal Finance - Network
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