The Fiscal Compact and Government Debt: One Law, Multiple Statistics

Publication: Policy Letter No. 22
Topic Area: Macro Finance
Authors: Iñaki Aldasoro,
Ester Faia
Date: Mar 2014
Keywords: government debt, statistics, Fiscal Compact

In many cases, the dire situation of public finances calls into question the very soundness of sovereigns and prompts corrective actions with far-reaching consequences. In this context, European authorities responded with several measures on different fronts, for instance by passing the "Fiscal Compact", which entered into force on January 1, 2013. Of critical importance in this framework is the assessment of a country’s situation by way of statistical measures, in order to take corrective actions when called for according to the letter of the law. If these statistics are not correct, there is a risk of imposing draconian measures on countries that do not really need it.

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