The implementation of a golden rule of public investment as a necessary institutional reform and an important step aimed at overcoming the constraints imposed by the new European Economic Governance are proposed. The rule is widely accepted in traditional public finance and can deliver both...

The euro area is currently going through its worst period of recession and economic stagnation since the Great Depression and World War II. The article tries to give an impression of the extraordinary degree of fiscal austerity and the devastating economic effects it has already had and must be...

This paper makes three main points. Fiscal policy, first, may be needed in the long run to maintain full employment and avoid secular stagnation. If fiscal policy is used in this way, second, the long-run debt ratio depends (i) inversely on the rate of growth, (ii) inversely on government...

In spite of many claims that the European treaties cannot be reformed, European economic governance has evolved substantially over the last two decades. The process has erected an ever more complex system of rules, deadlines, and commitments conferring more power on the European Commission and...

The paper analyses some well-known explanations of the eurozone crisis and seeks to provide an answer to the question of whether expansionary fiscal policy is feasible within the restrictive confines of the existing structure of the eurozone. The paper addresses this question by focusing on a...

Much of the criticism directed at austerity programs implemented after the 2007/2008 financial crisis, more forcefully in the eurozone, have relied on the same arguments Keynes and others raised against the (British) Treasury View developed in the 1920s and 1930s. Austerity, however, has been...

The origins of the reference values for budget deficits and public debt (3 and 60 per cent of GDP) in the euro area are explored. Both numbers came into the Maastricht Treaty by coincidence. Later attempts to legitimise them are traced and found unconvincing. In particular the debt cap is...

This contribution assesses the functioning of Europe's Economic and Monetary Union (EMU) during the first 20 years of the euro's existence. It argues that two formative intellectual currents converged at Maastricht to shape the design and reception of the euro regime: ordoliberalism and...

We argue that the institutional framework of the eurozone was designed to deny a role for fiscal policy. However, the Great Recession of 2008–2009 forced governments to intervene, mainly to avoid the collapse of their financial systems. At the same time, the severe recession implied a decrease...

While the European Union (EU) fiscal rules are suspended in the years 2020–2022, new rules are in the making and might be activated in 2023. If the old rules were used again, massive austerity would be required in the face of the strongly elevated level of public debt and the gap to the 60 per...