The most recent debt crisis in the Euro area has demonstrated that a lack of trust of the market participants in the sustainability of public debt can affect the countries access to the capital markets. There are good arguments suggesting that fiscal rules, such as the German debt brake, positively impact the trust of the market participants. However, empirical evidence for this causal relationship is scarce. This research project mainly aims at providing this evidence. Moreover, it will be studied how national fiscal rules have to be designed in order to be able to avoid crises of confidence, and how a successful rule-based fiscal policy at the national level can be established within the framework of the Stability and Growth Pact.
01.10.2010 - 30.06.2011
Bundesministerium der Finanzen, Berlin, DE