A new template for the European fiscal framework by Philippe Martin, Jean Pisani-Ferry, Xavier Ragot published by VOXEU (5/2021).
The temporary suspension of the European fiscal rules to enable member states to take emergency measures against the Covid crisis offers an opportunity for an ambitious reform of a now clearly outdated fiscal framework. This column, part of the Vox debate on euro area reform, argues that the reactivation of the rules, now foreseen in 2023, should be made contingent on a political agreement on reforming the fiscal framework, and proposes a comprehensive reform in which the new European fiscal framework would prioritise externalities arising from debt sustainability risks and demand spillovers. Fiscal targets should be differentiated depending on country vulnerabilities and implemented in a more decentralised way.
