Fiscal rules fail to tackle EU policy biases – IMF research
Future adjustments should focus on political economy factors, authors say
Fiscal procyclicality, excessive deficits, distorted budget composition and poor compliance with fiscal rules plague the European Union, but can be addressed by governance reforms targeted at aspects of political economy, International Monetary Fund researchers argue in a new paper.
Luc Eyraud, Vitor Gaspar and Tigran Poghosyan, economists in the IMF's Fiscal Affairs Department, catalogue a list of failings of the EU fiscal framework in a working paper published on January 30.
They point to
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