Fiscal upside, economic downside to EU deficit procedure – study
Fiscal consolidation sometimes led to restrictive pro-cyclical stances, research finds
The EU’s excessive deficit procedure (EDP) improved the fiscal stance of member states in the years leading up to the pandemic, according to a study by the Croatian National Bank but sometimes led to excessive fiscal tightening.
The paper finds that, over 10 quarters, being in the EDP improved a country’s cyclically adjusted primary balance (CAPB) by 1.69 percentage points on average.
The authors, Frane Banić and Ivan Žilić, say that between 2005 and 2019, EU members did not usually implement
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