Publication

This paper seeks to provide a financial guideline helping the EU's stumbling economy on its path towards sustainable growth. According to the authors, the two main economic initiatives, the Stability and Growth Pact (SGP) and the Lisbon Strategy (LS) are appropriate instruments to achieve sustainable economic growth for Europe. However, they spot some weaknesses in the application and in the implementation of these policies, affecting their effectiveness. As they argue, both, the SGP and the LS, face incentive problems that could be resolved if the two strategies were better connected. This would allow for increasing public finances which would accelerate growth. They propose to apply a Good Quality Finance Rule (GQFR) based on a budget and a debt pillar. As they conclude, the redirecting of public finances through GQFR is a necessary, but not sufficient condition to meet the LS goals.