Taner M. Yig it ˘ In analysing the sustainability of EU ﬁscal policies, the author does a very good job in balancing the EU political structure and its economic consequences. In his study on the EU-15, he initially focuses on the structure of ﬁscal policy coordination mechanisms in the EU to ﬁnd that the monitoring of ﬁscal prudence became much politicized, and that the larger countries with more political power tend to be less disciplined in their ﬁscal policies. He later conducts empirical tests, showing that (i) the likelihood of consolidation increases with debt ratio, that is, countries with larger initial debt burdens are more disciplined in their ﬁscal policies; (ii) the countries joining the EMU fall into a consolidation fatigue, noticeably relaxing their ﬁscal policies; and ﬁnally (iii) using growth accounting one can calculate the ﬁscal impulses that are independent of growth in the EU-15, illustrating that large ﬁscal impulses occur in election years. Following his diagnostic analysis, he continues with several recommendations toward both the improvement and better evaluation of ﬁscal performance in the European Union. The ﬁrst of these is the possibility of conﬂicts between the long and short-run targets, necessitating that the members should reconsider the balance between optimal and sustainable policies and not just concentrate on yearly debt or deﬁcit ratios. Secondly, the author notes that rather than simply looking at the ratios, policymakers should dissect them into their components, namely growth and debt (or deﬁcit) to separate out growth-promoting policies from political...
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