EU Fiscal Rules Fuel Pro-Cyclical Policies, Hindering Economic Stability.
Discretionary fiscal policies in the EU tend to worsen economic ups and downs, rather than smoothing them out. This is partly due to fiscal rules that limit the government's ability to stabilize the economy. Research shows that even when using better indicators, these policies still miss the mark in timing. Going against fiscal rules and increasing government debt make the situation worse. Following fiscal rules and keeping debt in check is key to making fiscal policies work better during economic fluctuations.