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Saraceno, Francesco

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Le Monde - France | 02/03/2012

Fiscal compact threatens growth

The new fiscal pact commits the EU states to more budget discipline. However the economists Jérôme Creel, Paul Hubert and Francesco Saraceno argue that this will be counterproductive in the left-liberal daily Le Monde: "If these rules are applied on the short term, a recession will be inevitable. That means that the heads of government will be forced to dissociate existing laws from their practical application when it comes to budgetary policy. If the ultimate goal of economic policy is to preserve stability and economic growth, the best thing would be to leave budget sinners unpunished.  ... Europe's governments, the ECB and the Commission seem to consider reducing public debt and deficits as political objectives in themselves, rather than as an instrument for attaining goals such as growth and inflation. This reversal of objectives and instruments boils down to denying any role for macroeconomic policy."

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