Francesco Saraceno | There are a number of ways, not necessarily politically feasible, to allow EMU countries to run semi-permanent government deficits. A first one could be to restore complete national budget sovereignty, (scrapping the Stability Pact). This would mean relying on market discipline alone for maintaining fiscal responsibility.
Francesco Saraceno | This post is nothing new. It is just a reminder for non European readers (or for distracted European readers), about the way things work in the EMU. The German Bundesbank President Weidmann violently attacked the European Commission for failing to enforce fiscal discipline within the Stability Pact.
The European Commission did not want to meddle with Spain’s general elections on June 26th and has postponed until July its decision regarding a sanction for the country’s non-compliance with its deficit target. But none of the European community experts have ventured to confirm that this sanction will finally be imposed.
MADRID | April 28, 2015 | By Carlos Díaz Güell | The Spanish economy is certainly turning the corner as evidenced by its growth rate, possibly exceeding 3% this year, and employment data, although both indicators are cooled down by analysts who believe growth in the medium and long term may be hampered by too many mortgages.
PARIS | March 29, 2015 | By Francesco Saraceno | The confidence fairy seems to have turned into a confidence witch. One more victim of the crisis. But this one will not be missed.
MADRID | By Luis Alcaide | In an op-ed at Wall Street Journal on Thursday, New EU Vice Commissioner Jyrki Katainen pledged for stimulating growth in the eurozone by keeping the proper fiscal consolidation. But his comment could be put in a different way: stimulating growth by all means as the only way of achieving fiscal consolidation. Stimulating growth means that deflation, a price level increase inferior to 2% (the Stability Pact target) is a more pressing requirement than meeting the 3% public deficit in the short term.