Prospects for National Stability and Convergence Programmes

- "Huge increase of government deficits in European countries in 2009 as a consequence of discretionary fiscal policies and, more important, a structural deterioration of budget balances."
- "A negative spillover from the increase in sovereign risk in Europe"
- "Are the current Stability and Convergence Programmes optimal with both short-run and long-run growth requirements?"
- "Very recently Olivier Blanchard and Carlo Cottarelli have proposed “Ten Commandments for Fiscal Adjustment in Advanced Economies”."
- "We evaluate Stability and Convergence Programmes according to these requisites."
- "Main conclusion: Stability and Convergence Programmes go in the right direction but more can be done, at least in the following areas:
• Contingency programmes, and pension and health reforms.
• Reforms to boost potential growth.
• Improvement of fiscal institutions.
• Coordination of monetary and fiscal policy, and coordination at the European level."
BBVA European Unions Economic Governance July2010