The Good, the Bad and the Ugly

Under substantial market pressure, policymakers have proposed a diverse set of far-reaching changes to the basic European fiscal architecture. The adoption of the so called “Six-pack”, “Two-pack” and the agreement on the Fiscal Compact made the fiscal framework more complex, but the proponents highlighted their main benefits in higher transparency at national level, more local ownership and stricter enforcement mechanisms. This paper´s objective is to critically assess the new framework, its initial implementation and to identify potential shortcomings. The well-known Kopits-Symansky criteria represent the basis for the review. We also formulate fifteen recommendations, which aim at a simpler, more internally consistent system where flexible interpretation is not necessary to eliminate tensions between various elements of the framework.