While Europe needs to rebuild fiscal buffers now, as Mario Draghi recently mentioned, the United States is embarking on a major tax reform, involving major tax cuts. How do Europeans see tasks on the fiscal side? In Europe, there are two different discussions. One is on the level of the deficit, or “fiscal stance”, the other on the composition, i.e.
In this respect, the prospects for the world economy are highly favourable. The European stability consensus aims at underpinning price stability with an equally stability-oriented fiscal policy. EU governments therefore agreed on the European Stability and Growth Pact. The idea of the Pact is to not only to promote stability by preventing the emergence of conflicts between monetary policy and fiscal policies.