Autori
Ricchi, Ottavio
Giachin Ricca, Elena
Morea, Roberto
Teobaldo, Serena
Assalve, Davide
Collura, Cristina

Titolo
Italy and fiscal rules:past performance and future prospects
Periodico
Ministero dell'Economia e delle Finanze. Dipartimento del Tesoro. Working paper
Anno: 2022 - Fascicolo: 1 - Pagina iniziale: 4 - Pagina finale: 54

The European Commission recently resumed a public consultation on the EU’s economic governance framework with the aim of gathering views and proposals on how to build a more transparent and effective fiscal policy framework. The present essay aims to assess current fiscal rules and alternative proposals that have been put forth by various authors and institutions over the past years. Our main purpose is to identify the critical aspects of fiscal rules and to build a toolkit allowing a better understanding of their implications under different economic circumstances and scenarios. We first take stock of existing fiscal rules as defined by the Stability and Growth Pact. We then review the main proposals of reform, notably the new expenditure rule designed by the European Fiscal Board (EFB). Using a forward-looking approach, we develop a tool for assessing the extent to which fiscal rules are i) counter-cyclical; ii) economically and politically viable; iii) able to ensure a credible fiscal adjustment; iv) able to provide “stable” prescriptions against sudden changes of underlying economic conditions. We focus on Italy as a case study for our broader analysis of fiscal rules. Starting from baseline growth and public finance forecasts, we project deficit and debt trajectories for Italy over a medium-term horizon assuming full compliance with each rule under examination from 2023 onwards, as the General Escape Clause is deactivated. We find that for Italy each rule embeds pros and cons with respect to the above-mentioned criteria. Overall, the EFB proposal appears to improve the framework in terms of stability and sustainability, while its counter-cyclicality may be inferior to the existing Structural Balance rule and its economic and political feasibility depends upon the required rate of annual debt reduction. In addition to quantitative criteria, in the concluding section of the paper we discuss additional aspects of fiscal rules, such as transparency, ownership and governance.



SICI: 1972-411X(2022)1<4:IAFRPA>2.0.ZU;2-
Testo completo: https://www.dt.mef.gov.it/export/sites/sitodt/modules/documenti_it/analisi_progammazione/working_papers/WP-1-marzo-2022.pdf

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