The role of fiscal rules in relation with the green economy

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Series Details PE 651.364
Publication Date August 2020
ISBN 978-92-846-7022-2
EC QA-03-20-579-EN-N
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This paper discusses the analytical basis for facilitating green public investment under the Stability and Growth Pact fiscal rules. It concludes that additional public debt created by deficit-financed green public investment is likely to increase fiscal sustainability risks. However, such additional risks could be justified to avoid the economic damages (which would also have long run consequences for public finances) arising in the absence of sufficient green public investment. The trade off could be improved if green public investment were financed through EU debt.

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