Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/154610
Authors: 
Kamps, Christophe
De Stefani, Roberta
Leiner-Killinger, Nadine
Rüffer, Rasmus
Sondermann, David
Year of Publication: 
2014
Series/Report no.: 
ECB Occasional Paper 157
Abstract: 
In the light of the lessons learned from the euro area sovereign debt crisis, the EU fiscal and macroeconomic governance framework was overhauled in 2011. Against this background, this paper analyses whether the broadened surveillance of fiscal and macroeconomic indicators under the strengthened governance framework would have facilitated the identification of emerging imbalances, had it been in place before the crisis. The findings suggest that the strengthened governance framework would have given earlier signals about emerging excessive fiscal and macroeconomic imbalances. Euro area countries thus would have been obliged to take preventive and corrective action at an earlier stage, provided that the stricter rules had been effectively implemented. At the same time, the paper concludes that the increased reliance of the EU fiscal governance framework on unobservable magnitudes such as the structural budget balance, which are difficult to measure in real time, will continue to impede the timely identification of underlying fiscal imbalances. It is suggested that the new macroeconomic imbalance procedure could have given earlier indications about the emergence of excessive macroeconomic imbalances, which in turn posed risks for fiscal sustainability. Looking forward, these preliminary findings suggest possible synergies between the, until now largely unrelated, fiscal and macroeconomic governance frameworks.
Subjects: 
Macroeconomic Imbalance Procedure
real-time potential output estimates
Stability and Growth Pact
structural balance
JEL: 
H3
H6
E02
E61
Document Type: 
Research Report

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