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Peter Bofinger Given the substantial increase in public debt due to the pandemic, there is a growing debate on new rules or standards for fiscal policy in the euro area. It is obvious that the reference value of 60 per cent of gross domestic product inscribed in the Maastricht treaty of 1992 can no longer serve as an anchor for the fiscal-policy framework. The target was derived from the average debt/GDP ratio of European Union member states in 1990. It thus lacks the sound theoretical and empirical basis required of any evidence-based policy. And with an average debt among the advanced economies in 2021 of 122 per cent even 140 per cent for the G7 the 60 per cent benchmark is now completely detached from reality.

United statesPolly toynbeePeter bofingerFederal reserve bankEuropean unionEuropean central bank survey of professional forecastersGrowth pactUnited states treasuryLarry summersAbba lernerPromote economic stabilitySocial europeModern monetary theoryEuropean central bankProfessional forecastersMacroeconomic imbalance procedure