Menguy, Séverine
Limiting public expenditure to ensure public debt sustainability in the EMU / Séverine Menguy
Resumen.
Bibliografía.
In the European Economic and Monetary Union, the fiscal background must ensure the sustainability of the public debt, but fiscal policies must also keep enough flexibility to stabilize global economic activity in case of large shocks, as the common monetary policy becomes less efficient. In the prospect of a reform of the Fiscal Compact after the standby of European fiscal rules with the COVID-19 health crisis, and in conformity with theoretical studies underlying the advantages of such rules, the current paper suggests a rule related to nominal public expenditure excluding interest rates, with a debt feedback mechanism to ensure the sustainability of the public debt path. According to this rule, it appears that six Economic and Monetary Union member countries are particularly highly indebted and should probably control and reduce their public expenditure in order to make their public debt sustainable: France, Spain, Italy, Belgium, Portugal, and Greece.
DEUDA PUBLICA
GASTO PUBLICO
REDUCCION
PRESUPUESTOS
SOSTENIBILIDAD FISCAL
POLITICA FISCAL
UNION ECONOMICA Y MONETARIA
UNION EUROPEA
Public Finance Review 0048-5853 v. 52, n. 1 January 2024, p. 78-110
Limiting public expenditure to ensure public debt sustainability in the EMU / Séverine Menguy
Resumen.
Bibliografía.
In the European Economic and Monetary Union, the fiscal background must ensure the sustainability of the public debt, but fiscal policies must also keep enough flexibility to stabilize global economic activity in case of large shocks, as the common monetary policy becomes less efficient. In the prospect of a reform of the Fiscal Compact after the standby of European fiscal rules with the COVID-19 health crisis, and in conformity with theoretical studies underlying the advantages of such rules, the current paper suggests a rule related to nominal public expenditure excluding interest rates, with a debt feedback mechanism to ensure the sustainability of the public debt path. According to this rule, it appears that six Economic and Monetary Union member countries are particularly highly indebted and should probably control and reduce their public expenditure in order to make their public debt sustainable: France, Spain, Italy, Belgium, Portugal, and Greece.
DEUDA PUBLICA
GASTO PUBLICO
REDUCCION
PRESUPUESTOS
SOSTENIBILIDAD FISCAL
POLITICA FISCAL
UNION ECONOMICA Y MONETARIA
UNION EUROPEA
Public Finance Review 0048-5853 v. 52, n. 1 January 2024, p. 78-110