Report
Should the euro zone’s fiscal doctrine be changed?
According to the euro zone’s current fiscal doctrine, the structural fiscal deficit (corrected for the effects of the cycle) must be zero, and the primary fiscal surplus must ensure that the public debt ratio returns towards 60% of GDP. But this doctrine fails to take into account that: If long-term interest rates remain low for a long time, the acceptable public debt ratio is markedly higher than in the past; Governments have needs for significant useful public investments (energy transition, support for innovative companies, education and training, etc.); Monetary policy is ineffective in taking economies out of a situation of excess savings (deflation). The problem is well known: it would make sense to end fiscal austerity in the euro zone, but it requires maintaining wage restraint to prevent a rise in interest rates and public debt crises .
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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