Fiscal policy rules that the European Union imposes on the member countries have been reformed during the course of Euro crisis. A multinational research project led by Etla aims at assessing the appropriateness of the reforms and finding prospective new ways to promote economic stability in the member countries.
The project is called “Fiscal Rules and Strategies under Externalities and Uncertainties”, FIRSTRUN for short. As the name indicates, the project aims at clarifying how effects of national fiscal policies on other EU countries and uncertainty about economic development should be taken into consideration, when common fiscal policy rules and national policy strategies are planned. The project embraces analysis of several topical and contested proposals for evening out business cycles in member countries. Financing unemployment benefits out of common EU budget and more flexible use of structural EU funds are a couple of examples.
The project makes it possible to study several issues that are interesting also from the point of view of an individual member country, for example how new fiscal policy rules affect economic policy in that country, and what kind of economic policy coordination would be worth promoting for it in the EU.
In addition to Etla, seven European research institutes or universities participate in the project. They are London School of Economics (LSE) and National Institute of Economic and Social Research (NIESR) from Great Britain, Centre for European Policy Studies (CEPS) from Belgium, Institute for Advanced Studies (IHS) from Austria, Guido Carli University (LUISS) from Italy, Center for Social and Economic Research (CASE) from Poland, as well as Institute of Economic Research (IER) from Slovakia.
