Tuesday , July 7 2020
Home / Project Syndicate / Europe Must Fix Its Fiscal Rules

Europe Must Fix Its Fiscal Rules

Summary:
In an environment of persistently low interest rates and below-potential output, economic policymakers must rethink the prevailing approach to public debt. For the eurozone, this means creating a common budget, or at least overhauling the fiscal rules that have tied member-state governments' hands for no good reason. TRENTO – Earlier this year, I argued that in countries where interest rates are extremely low and public debt is considered safe by investors – making it less costly from both a fiscal and economic standpoint – larger fiscal deficits may be needed to make up for the limitations of monetary policy. The eurozone has now reached this stage. Europe’s Silent

Topics:
Olivier Blanchard considers the following as important:

This could be interesting, too:

[email protected] (Cyril Morong) writes Developing World Loses Billions in Money From Migrant Workers

Paul Krugman writes How America Lost the War on Covid-19

Scott Sumner writes Don’t confuse science fiction with reality

Timothy Taylor writes An Audit Study of Discrimination in the Boston Rental Market

In an environment of persistently low interest rates and below-potential output, economic policymakers must rethink the prevailing approach to public debt. For the eurozone, this means creating a common budget, or at least overhauling the fiscal rules that have tied member-state governments' hands for no good reason.

TRENTO – Earlier this year, I argued that in countries where interest rates are extremely low and public debt is considered safe by investors – making it less costly from both a fiscal and economic standpoint – larger fiscal deficits may be needed to make up for the limitations of monetary policy. The eurozone has now reached this stage.

Olivier Blanchard
Olivier Blanchard joined the Peterson Institute for International Economics as the first C. Fred Bergsten Senior Fellow in October 2015. A citizen of France, Blanchard has spent most of his professional life in Cambridge, MA. After obtaining his PhD in economics from the Massachusetts Institute of Technology (MIT) in 1977, he taught at Harvard University, and returned to MIT in 1982.

Leave a Reply

Your email address will not be published. Required fields are marked *