This study was prepared for the European Parliament’s Committee on Economic and Monetary Affairs. The study is available on the European Parliament’s online database, ‘ThinkTank‘. Copyright remains with the European Parliament at all times.
In the context of the review of the EU economic governance framework, this study recommends a multi-year ahead expenditure rule anchored in an appropriate public debt target, augmented with an asymmetric golden rule that provides extra fiscal space only in times of a recession. An improved governance framework should strengthen national fiscal councils and include a European fiscal council, while financial sanctions should be replaced with instruments related to surveillance, positive incentives, market discipline and increased political cost of noncompliance.
This document was provided by the Economic Governance Support Unit at the request of the ECON Committee.