Eurozone fiscal rules have major pro-cyclical effects – DNB paper
Researchers say strengthening fiscal buffers may modify stability pact’s effects
The stability and growth pact for eurozone members has had a significant pro-cyclical impact on fiscal policy, a working paper published by the Netherlands Bank finds.
In Fiscal discipline in Emu? Testing the effectiveness of the excessive deficit procedure, Jasper De Jong and Niels Gilbert examine the pact’s excessive deficit procedure, or EDP. This makes recommendations for each individual eurozone member country as to how it should cut any large deficit, but is not formally enforced.
The
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