Consider how France, for example, would have responded in the 1990’s to a substantial decline in demand for its exports. If there had been no government response, production and employment would have fallen. To prevent this, the Banque de France would have lowered interest rates. In addition, the fall in incomes would have automatically reduced tax revenue and increased various transfer payments. The government might have supplemented these “automatic stabilizers” with new spending or by lowering tax rates, further increasing the fiscal deficit.
In addition, the fall in export demand would have automatically caused the franc’s value to decline relative to other currencies, with lower interest rates producing a further decline. This combination of monetary, fiscal, and exchange-rate changes would have stimulated production and employment, preventing a significant rise in unemployment.
But when France adopted the euro, two of these channels of response were closed off. The franc could no longer decline relative to other eurozone currencies. The interest rate in France – and in all other eurozone countries – is now determined by the European Central Bank, based on demand conditions within the monetary union as a whole. So the only countercyclical policy available to France is fiscal: lower tax revenue and higher spending.
While that response implies a higher budget deficit, automatic fiscal stabilizers are particularly important now that the eurozone countries cannot use monetary policy to stabilize demand. Their lack of monetary tools, together with the absence of exchange-rate adjustment, might also justify some discretionary cyclical tax cuts and spending increases.
Unfortunately, several eurozone countries allowed fiscal deficits to grow in good times, rather than only when demand was weak. In other words, these countries’ national debt grew because of “structural” as well as “cyclical” budget deficits.
Structural budget deficits were facilitated over the past decade by eurozone interest rates’ surprising lack of responsiveness to national differences in fiscal policy and debt levels. Because financial markets failed to recognize distinctions in risk among eurozone countries, interest rates on sovereign bonds did not reflect excessive borrowing. The single currency also meant that the exchange rate could not signal differences in fiscal profligacy.
Greece’s confession in 2010 that it had significantly understated its fiscal deficit was a wake-up call to the financial markets, causing interest rates on sovereign debt to rise substantially in several eurozone countries.
The European Union’s summit in Brussels in early December was intended to prevent such debt accumulation in the future. The heads of member states’ governments agreed in principle to limit future fiscal deficits by seeking constitutional changes in their countries that would ensure balanced budgets. Specifically, they agreed to cap annual “structural” budget deficits at 0.5% of GDP, with penalties imposed on countries whose total fiscal deficits exceeded 3% of GDP – a limit that would include both structural and cyclical deficits, thus effectively limiting cyclical deficits to 3% of GDP.
Negotiators are now working out the details ahead of another meeting of EU government leaders at the end of January, which is supposed to produce specific language and rules for member states to adopt. An important part of the deficit agreement in December is that member states may run cyclical deficits that exceed 0.5% of GDP – an important tool for offsetting declines in demand. And it is unclear whether the penalties for total deficits that exceed 3% of GDP would be painful enough for countries to sacrifice greater countercyclical fiscal stimulus.
The most frightening recent development is a formal complaint by the European Central Bank that the proposed rules are not tough enough. Jorg Asmussen, a key member of the ECB’s executive board, wrote to the negotiators that countries should be allowed to exceed the 0.5%-of-GDP limit for deficits only in times of “natural catastrophes and serious emergency situations” outside the control of governments.
If this language were adopted, it would eliminate automatic cyclical fiscal adjustments, which could easily lead to a downward spiral of demand and a serious depression. If, for example, conditions in the rest of the world caused a decline in demand for French exports, output and employment in France would fall. That would reduce tax revenue and increase transfer payments, easily pushing the fiscal deficit over 0.5% of GDP.
If France must remove that cyclical deficit, it would have to raise taxes and cut spending. That would reduce demand even more, causing a further fall in revenue and a further increase in transfers – and thus a bigger fiscal deficit and calls for further fiscal tightening. It is not clear what would end this downward spiral of fiscal tightening and falling activity.
If implemented, this proposal could produce very high unemployment rates and no route to recovery – in short, a depression. In practice, the policy might be violated, just as the old Stability and Growth Pact was abandoned when France and Germany defied its rules and faced no penalties.
It would be much smarter to focus on the difference between cyclical and structural deficits, and to allow deficits that result from automatic stabilizers. The ECB should be the arbiter of that distinction, publishing estimates of cyclical and structural deficits. That analysis should also recognize the distinction between real (inflation-adjusted) deficits and the nominal deficit increase that would result if higher inflation caused sovereign borrowing costs to rise.
Italy, Spain, and France all have deficits that exceed 3% of GDP. But these are not structural deficits, and financial markets would be better informed and reassured if the ECB indicated the size of the real structural deficits and showed that they are now declining. For investors, that is the essential feature of fiscal solvency.
Martin Feldstein, Professor of Economics at Harvard, was
Chairman of President Ronald Reagan's Council of Economic Advisers and is
former President of the National Bureau for Economic Research.
Martin Feldstein: 歐洲正如何制造蕭條
歐洲政治領導人大概就要在財政計劃上達成一致了，該計劃的實施可能將歐洲推向嚴重蕭條。為什麼呢？我們可以從歐洲國家采用歐元前後應對需求下降的反應中一窺端倪。
以法國為例。如果在20世紀90年代，他們會怎樣應對出口需求驟減的局面？如果政府對此無動於衷，那麼產量和就業將下降。為了防止這一幕，法蘭西銀行會降低利率。此外，收入的下降會自動減少稅收流，增加多項轉移支付項目。政府可能會從增加支出項目和降低稅率來進一步補充這一“自動穩定器”，增加財政赤字。
此外，出口需求的下降會自動使法郎相對其他貨幣貶值，降低利率也會加速貶值。這樣一種貨幣、財政和彙率的變化組合將次級生產和就業，防止失業率的大幅攀升。
但使用歐羅後，三大反應渠道中有兩大被堵死了。法郎不再能夠相對其他歐羅區貨幣貶值。法國的利率——以及所有歐羅區國家的利率——都由歐洲央行決定，而歐洲央行的決定是基於整個貨幣聯盟的需求情況做出的。因此，法國唯一可以使用的反周期政策只剩下了財政政策：降低稅率、增加支出。
這樣的應對措施會導致更高的財政赤字，但在現今歐羅區國家無法使用貨幣政策穩定需求的情況下，財政自動穩定器就顯得愈加重要了。歐羅區國家沒有貨幣工具可用，匯率調整之路也不可行，因此，自然就只能動用能夠自由裁量的周期性減稅和增支政策了。
不幸的是，不少歐羅區國家只有在景氣階段才能增加財政赤字，疲軟階段無法這麼做。換句話說，這些國家的國債增長既受“周期性”預算赤字的影響，也受“結構性”預算赤字的影響。
過去十年來，歐羅區匯率令人奇怪地沒有對財政政策和債務水平的國與國之間的差異做出足夠的反應，這助長了結構性預算赤字的增加。金融市場無法分辨歐元區國家之間的風險差別，因此主權債券的利率不再反應過度借貸狀況。單一貨幣還意味著匯率也失去了顯示財政狀況差異的功能。
2010年，希腊坦承該國大幅低報了財政赤字，這一事件讓市場警醒，一些歐羅區國家的主權債務利率出現了飆升。
12月上旬的歐盟布魯塞爾峰會意在防止未來債務的進一步累積。各成員國首腦原則上同意通過修改各國憲法來限制未來財政赤字，確保預算平衡。具體而言，他們同意將年度“結構性”預算赤字限定在GDP的0.5%以內，而如果一國財政總赤字超過GDP的3%，將遭受懲罰措施。3%的比例包括了結構性和周期性赤字，因此，周期性赤字也被限定在了GDP的3%以內。
1月下旬，歐盟政府首腦將舉行又一次會議，計劃在此次會議上產生成員國需要遵守的具體規定和規則，因此，談判者正在就細節問題進行磋商。12月的赤字協定中有一個重要部分：成員國可以出現超過GDP的0.5%的周期性赤字，這將使抵消需求下降影響的重要工具。至於總赤字超過GDP的3%所遭致的懲罰措施是不是足夠重，能迫使各國犧牲更大手筆的反周期財政赤字，目前還不得而知。
目前，最令人擔心的情況是歐洲央行官方正式指責計劃中的規則不夠嚴厲。歐洲央行執行委員會關鍵成員艾斯繆森（Jorg Asmussen）在寫給談判者的信中說，應該只在“自然災害和嚴重緊急情況”超過了政府可以控制的範圍時，才允許各國打破0.5% GDP的赤字上限。
如果這條規定被采用，那麼將扼殺自動周期性財政調整，而這又將很容易地導致需求的下跌循環和嚴重蕭條。比如，如果世界其他地區情況不佳而導致法國出口品的需求下降，那麼法國的產出和就業也將隨之下降。這將導致稅收收入減少、轉移支付增加，很容易就會把財政赤字推到相當於GDP的0.5%的水平。
如果法國必須消除周期性赤字，那麼它只能增稅和減支。這將進一步拉低需求，導致歲入的進一步下降和轉移支付的進一步上升——從而產生更大的財政赤字，然後需要進一步的財政緊縮。這一財政緊縮-經濟活動疲軟的下跌循環不知道要進行多久才能結束。
如果這一方案實行，將造成極高的失業率，並堵死復蘇之路，簡言之，就是發生蕭條。在實踐中，可能會有國家違反規則，正如當年法國和德國否定規則而沒有受到懲罰導致舊《增長與穩定公約》被拋棄一樣。
更明智的做法是關注周期性和結構性赤字的區別，允許因自動穩定器功能產生的赤字。歐洲央行可以作為區別的仲裁者。此外，還必須分清真實（經通脹調整）赤字和名義赤字，後者可能因為通脹抬頭導致主權借貸成本上升而上升。
意大利、西班牙和法國的赤字均超過了GDP的3%。但它們的赤字並非結構性的，如果歐洲央行能夠指出真實結構性赤字的規模並顯示它們在下降，那麼金融市場可以得到更好的信息和定心丸。對投資者來說，這才是財政償付能力的關鍵指標。
作者是哈佛大學經濟學教授，列根總統經濟顧問委員會主席，前國民經濟研究局主席
