The workshop will look at the role of institutions for supporting sound fiscal policies during and after times of economic crisis. It will adopt a broad notion of institutions, comprising institutional characteristics of fiscal governance that structure the budgetary process in its planning, approval, and implementation stage – such as numerical fiscal rules, independent bodies acting in the field of budgetary policy, medium-term budgetary planning frameworks, and budgetary procedures – but also institutions in other policy areas with potentially significant impacts on budgetary policies and outcomes.
Fiscal policy needs to be credible in order to achieve and ensure sustainability. In this context, institutional arrangements of fiscal governance are particularly relevant: policy experience, supported by research, proves them to be instrumental in maintaining sound fiscal policies both by their direct effect on fiscal outcomes and as signals adopted by governments to commit to discipline in future and thus to ensure sustainability – a feature which might grant governments some flexibility in debt reduction, which in turn might prove less costly for economic activity. In the EU fiscal surveillance framework, institutional arrangements of national fiscal governance are also becoming increasingly relevant, in particular by the ongoing adoption of a Council directive on requirements for budgetary frameworks of the Member States. For empirical analysis, the fiscal challenges built up by the economic and financial crisis are providing for a natural experiment to test the ability of relevant institutions to foster
fiscal sustainability in turbulent times.
This year’s Public Finance Workshop will be devoted to deriving insights from this experience, in particular along the lines outlined below. Although fiscal governance institutions are a natural focus of inquiry, the scope of the workshop will not be restricted to them. Other institutions, e.g. in the area of labour market policies, regulation, etc., may also be considered insofar as they are relevant for government finances. The workshop will be arranged in three sessions around the following questions.
How can institutions provide relative stability during a crisis?
The economic crisis challenged fiscal policies in the short and medium term in different ways, depending not only on starting fiscal positions and stabilisation policies adopted but also on institutions in fiscal governance and other policy areas. This calls for looking at the impact of different institutional frameworks on differences in the fiscal impact of the crisis, as reflected e.g. in risk premia, sovereign ratings, or fiscal performance under conditions of macro-economic stabilisation, or the ability of institutions to provide for temporary crisis remedy without introducing permanent distortions. Importantly, it needs to be better understood which institutional features of fiscal governance provide for higher resilience of economies and the conduct of fiscal policy respectively against large shocks as witnessed in the crisis: relevant examples include revenue rules to prevent spending windfall proceeds, or reliable statistical reporting systems. A better understanding is also required of institutional flexibility to accommodate crisis mitigation without compromising the stability and credibility of the fiscal governance framework in place and its binding character in normal times: ideally, the rules of the game should be robust to economic downswings even if these prove to be large; for numerical fiscal rules, well-specified escape clauses are a case in point. More generally, the working of fiscal governance institutions should be studied under conditions of macroeconomic and fiscal variables’ realisations at different parts of their probability distribution. While it is necessary to better understand the role institutions might have to provide for stability during a crisis and pave the way for appropriate fiscal exit respectively, it is also desirable to go further and assess the possible contribution of fiscal governance to the prevention of crises and to the attenuation of macroeconomic and fiscal imbalances specifically.
How are policy institutions shaped by conditions of public finance in times of crisis?
The relationship between fiscal performance in times of crisis and national fiscal institutions might be bidirectional: while fiscal institutions impact on fiscal performance, the fiscal impacts of the crisis might induce reforms of the fiscal governance frameworks in place, depending on country-specific economic and political circumstances. Indeed, many EU members relaxed the constraints implied by their fiscal governance frameworks in the first phase of the crisis to accommodate unexpected expenditure slippages and tax revenue shortfalls: thus, part of the institutional frameworks of fiscal policy has not survived the test of the crisis or has been left damaged by its consequences. At the later stage with mounting public debt, EU members have again strengthened fiscal governance, not least under the auspices if IMF/EU programmes in some countries and influenced by the closer scrutiny imposed by financial markets respectively. This calls for insights on experiences with fiscal governance reforms in times of fiscal stress, and the conditions leading to these. The linkages between fiscal policy institutions and expectations shall also be scrutinised: among others, it needs to be better understood how expectations on fiscal policy have adapted to the crisis, and how the crisis impacts have shaped the ability of fiscal institutions to anchor expectations. Analyses of the political economy of institutional reform after crisis might also include institutions shaping specific areas of public expenditure, such as health care and pensions.
Which institutions facilitate stabilisation and/or adjustment policies and the trade-off between them?
The economic and financial crisis has left the European economies with pressing needs for economic stabilisation and adjustment. The legacy of the crisis on budgetary consolidation requires a well-considered approach towards stabilisation and adjustment respectively: therefore, stock should be taken of the conditions, possibilities and limitations of approaches dubbed as smart consolidation, as well as how these are shaped by institutional features of fiscal governance. Different properties of fiscal governance institutions might also be looked at as regards the potentially conflicting objectives of stabilisation and consolidation, including the role of judgment of non-partisan fiscal bodies. Finally, stabilisation and adjustment policies have been importantly shaped by surveillance of international institutions, the role of which might also be considered.
Against this background the Commission invites the submission of contributions addressing the above topics.
General information and conditions
It is expected that 6 to 8 papers are to be presented the day of the workshop, followed by the comments of discussants and a general exchange of views among the participants.
The final papers will have to be original work created in response to this call for papers and should be about 15,000 to 20,000 words in length.
Selected authors will be required to electronically send a fully developed version of their paper to DG ECFIN by 1st November 2011 and to present it at the workshop on 30 November. The final version of the paper should be submitted electronically by 31st January 2012.
In accordance with the conditions of the purchase order [36 KB] , the Commission intends to pay a fee of € 4,000 per paper and to arrange travel and accommodation as well as to provide a daily allowance for one speaker per paper to present it at the workshop in Brussels, irrespective of whether the paper is authored or co-authored. The travel and accommodation arrangements will be made via a travel agency, acting on behalf of the Commission.
Candidates are invited to submit extended abstracts (up to 1,500 words) of research proposals related to the above mentioned topics. Papers can be co-authored (proxy form co-author [15 KB] ).
Extended abstracts should be submitted together with
- a curriculum vitae of the (co-) author(s);
- a list of publications of the (co-)author(s);
- signed proxy form(s), in case of co-authorship
to the email ECFIN-PUBLIC-FINANCESfirstname.lastname@example.org, clearly mentioning the topic of the paper in the subject line of the email.
The above mailbox is reserved solely for submissions. Submissions sent to other mailboxes or to Commission staff cannot be accepted. No other communication should be addressed to this mailbox.
Deadline for submission: 22 June 2011 (23:59 CET)
The award criteria for evaluating the submitted research proposals are as follows:
- clarity of the submission in (i) outlining the topic, (ii) identifying its theoretical foundations and/or the empirical techniques to be used for analysis, as appropriate, and (iii) specifying its policy implications,
- quality of the submission in terms of its potential to provide robust economic analysis and value added vis-à-vis existing academic literature;
- relevance of fiscal policy implications of the proposed research in the European context;
- excellence of the (co-)author(s) as demonstrated by academic achievement ( track record of their published research on related issues in leading journals)
- potential for a fruitful exchange among the workshop participants.
The submissions will be evaluated and ranked with a view to select about 6 to 8 proposals. The selection procedure is expected to be completed by end July 2011. Candidates will be informed in due time of the outcome of the procedure.
Publication and copyright issues
Copyright will be governed by the provisions specified in DG ECFIN’s Special Conditions attached to the purchase order. Conditional on quality, papers contributed to the workshop might be published in a volume collecting the workshop proceedings. The Commission will retain the copyright.
For further information please contact Anna Iara, email:
email@example.com, tel. +32-2-29.53.804.