Brussels, 17 January 2008
Despite the impressive fiscal retrenchment programmes implemented by some Member States in the run up to the Economic and Monetary Union (EMU) and also taking into account the recent progress in correcting excessive deficits, the scope for further fiscal consolidation and for strengthening arrangements that help safeguard sound fiscal positions has not vanished. First, the impending budgetary effects of ageing population require Member States to create the necessary room in their budgets so as to address the increasing weight of age-related expenditures. Second, based on recent experience there is a tendency to spend windfalls during upturns which gives rise to (i) a pro-cyclical fiscal stance and (ii) reduced room for manoeuvre in subsequent downturns.
The workshop aimed at improving the understanding of the determinants and tools of two inter-related aspects of fiscal policy: achieving and safeguarding sound fiscal positions. The topic is particularly relevant for the effective implementation of the preventive arm of the Stability and Growth Pact (SGP) which requires Member States to achieve and maintain medium-term budgetary objectives (MTOs) that pursue a triple aim: (i) make rapid progress towards long-term sustainability of public finances; (ii) safeguard against the risk of breaching the 3% of GDP threshold of the Treaty; (iii) create room for manoeuvre for automatic stabilisers to play over the cycle. Member States are also required to avoid pro-cyclical fiscal policies and to use economic good times to step up the adjustment towards the MTOs.
The workshop was organised in three thematic sessions focusing on (i) fiscal policy and institutions, (ii) lessons from fiscal consolidation, and (iii) response of fiscal policy to the cycle. See detailed Programme (pdf file 18 kb)
Copyright rests with the author for papers 2, 3 and 6.
Session 1: Fiscal policy and institutions
Chair: Servaas Deroose (DG ECFIN)
|Jürgen von Hagen (University of Bonn, Indiana University and CEPR):
Sticking to fiscal plans: the role of fiscal institutions
1. presentation paper
|Discussant: Steven A. Symansky (IMF)
|Ashoka Mody (IMF): Breaking the impediments to budgetary reforms:
evidence from Europe
Stefania Fabrizio and Ashoka Mody (IMF): Breaking the impediments to budgetary reforms: evidence from Europe
2. presentation paper
|Discussant: Roel Beetsma (University of Amsterdam)
Session 2: Lessons from fiscal consolidation
Chair: Lucio Pench (DG ECFIN)
|Stéphanie Guichard (OECD): What promotes fiscal consolidation:
OECD country experiences
Stéphanie Guichard, Mike Kennedy, Echkard Wurzel and Christophe André (OECD): What promotes fiscal consolidation: OECD country experiences
3. presentation paper
|Discussant: Ludger Schuknecht (ECB)|
|Silvia Ardagna (Harvard University): Determinants and
consequences of fiscal consolidation in OECD countries
4. presentation paper
|Discussant: Paul J. van den Noord (DG ECFIN)
Session 3: Response of fiscal policy to the cycle
Chair: Istvan Szekely (DG ECFIN)
|Sandro Momigliano (Banca d'Italia): The cyclical response of
fiscal policy in the euro area. Why do results of empirical research differ so
Roberto Golinelli and Sandro Momigliano (University of Bologna, Banca d'Italia):
The cyclical response of fiscal policy in the euro area. Why do results of empirical research differ so strongly?
5. presentation paper
|Discussant: Carlos Martinez Mongay (DG ECFIN)|
|Richard Morris (ECB): Uncertainty in measuring the underlying
budgetary position and fiscal stance
Matthias Mohr and Richard Morris (ECB): Uncertainty in measuring the underlying budgetary position and fiscal stance
6. presentation paper
|Discussant: Lorenzo Codogno|
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