Establishing a fiscal dialogue in Europe

Jérôme Creel (1)

1 OFCE - Observatoire français des conjonctures économiques (Sciences Po)

In this contribution, I use the Fiscal theory of the price level as a backdrop for a discussion on the risks that expansionary fiscal policies may pose on debt sustainability. I recall that a regime of fiscal dominance does not lead to macroeconomic instability. I also review a few empirical papers on fiscal sustainability and I conclude, also based upon own estimates, that it is not a major concern, at least in the short to mid-run. Finally, I argue that Europeans should continue on the fiscal impetus they contributed to in 2020 by fostering coordination and transparency on EU fiscal policies. To achieve this objective, I revisit the idea of an enhanced dialogue on fiscal matters at the European Parliament and propose to establish a Fiscal Dialogue with the EU Member States.

Keywords: fiscal policy; public debt; fiscal governance; European Union

Domains: Economics and Finance

Jérôme Creel. Establishing a fiscal dialogue in Europe. 2021. ⟨hal-03363670⟩