Abstract
The cyclically adjusted budget balance (CAB) plays a key role in the EU fiscal surveillance framework. It started off in a supporting role in the shadow of the headline deficit and, before long, turned into the linchpin of the rules of the Stability and Growth Pact. The steep ascent was driven by high expectations which, with the passing of time, were only partly met. The everyday practice of the EU fiscal surveillance rapidly revealed a number of caveats of the CAB which, at times, hampered the effectiveness of fiscal surveillance. This paper provides a comprehensive review of the changing fortunes of the CAB in the EU fiscal surveillance framework. It portrays its main shortcomings and the way they are dealt with in practice.
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The views expressed in this paper are those of the authors and do not necessarily reflect the position of the European Commission. The authors are indebted to Salvador Barrios, Servaas Deroose, Antoine Deruennes, Vitor Gaspar, István Székely and Lucio Pench for useful comments.
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Larch, M., Turrini, A. The cyclically adjusted budget balance in EU fiscal policymaking. Intereconomics 45, 48–60 (2010). https://doi.org/10.1007/s10272-010-0324-9
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DOI: https://doi.org/10.1007/s10272-010-0324-9