They fail to recognise the benefits of cross-country risksharing and the vital role played by the public sector in underpinning it. In other words, rules based purely at a national level, or even rules that coordinate a fiscal stance across countries, are not enough by themselves.
Empirical evidence suggests that spillovers from a fiscal expansion in one euro area country to others are positive, but small. So while it is important for those countries with available fiscal space to use it domestically to support overall stabilisation, a central fiscal capacity with the ability to allocate expenditure across countries would be more powerful.