The Golden Rule of Public Investment: protecting fiscal leeway and public infrastructure in the EU

Summary:

The fiscal constraints imposed by the new European economic governance have had a detrimental effect on public investments in the member states in recent years.

This policy brief proposes to implement the Golden Rule of Public Investment, a rule which states that net public investments - increases of the public and/or social capital stock providing future benefits, should be financed by debt, on other words, excluded from balanced-budget rules. The authors make the case for the introduction of such a rule at European and member state level and answer some of the arguments used against the application of such a rule.

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