Today's fiscal policy in the EU countries is defined by financial prudence. It gives priority to restrictive spending and discipline in public finances. EU fiscal policy rules (Maastricht Agenda) and member countries' own fiscal policy regulations such as those in Sweden and Germany prohibit large public budget deficits and high public debt. The global financial crisis in 2007-2009 did not lead to a change in course. On the contrary, it caused a further tightening of the EU's fiscal policy rules, leading to severe fiscal austerity in the affected member states. As in Germany, there is still a general political consensus across all main parties in Sweden that the fiscal policy framework from the end of the 1990s has "served us well".
However, more and more economists believe that the regulated fiscal policy needs to be reformed to provide greater scope for fiscal policy to stabilize the economy. They also believe that debt-financed public investment could have positive effects on productivity growth and secure tomorrow's welfare. What are the long-term consequences of today’s austerity policy? What have been the effects of budgetary constraints in Sweden and Germany? What are the alternatives to the current fiscal rules?
- Peter Bofinger is a reputed professor in Monetary and International Economics at the German University of Würzburg and was until this year one of the five members of the German Council of Economic Advisors. Peter Bofinger belongs to the economists who have long criticized the EU countries' fixation on the public debt ratio and the public budget balance. He believes that the fiscal rules, above all, should make exceptions for public investment.
- Lennart Erixon is professor at the Department of Economics, Stockholm University. He is member of a network constituted by a group of economists and others interested in the Post-Keynesian approach to studies of economic policy.
- Stig Tegle has a doctor degree in economics and has worked e.g. as an economist at The Swedish Confederation of Professional Employees (TCO).
16:10 Input by Dr. Stig Tegle
16:15 Input by Prof. Peter Bofinger
Moderation: Prof. Lennart Erixon
Time and place:
Tuesday, September 10th 2019, 16.00-17.30 (registration from 15.45)
ABF, Sveavägen 41, Stockholm
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