It has therefore led to procyclical fiscal policy, both in good and bad times, with detrimental effects on business cycle amplitude, economic welfare and debt sustainability.
Importantly, even if the rule that a country’s debt must decline annually by 1/20th of the gap between its actual debt level and the 60 percent anchor guarantees sustained debt reduction, it cannot serve  as a homogeneous guiding principle for fiscal policy across EU member states today, where the dispersion of debt-to-output ratios among countries is very large, and the contribution of the ‘snowball effect’ in debt reduction is very different across Member States.