A Possible change of EU states‘ fiscal policy in conditions of world economy globalization: debt redemption aspect
ENIn this paper the alternative index of fiscal policy evaluation is proposed; the fiscal policies of the EU, the USA, and Japan are also evaluated; and proposals for EU fiscal policy development are made. Proposed Public Debt Evaluation index, i.e. Public Debt Morality index is related to a human’s active life expectancy. According to the author, the public debt should be redeemed over a period assuring the responsibility of the current generation, which makes decisions regarding the fiscal policy pursued, by it; only in such a case at least minimum moral controlling pressure on the government making economic policy decisions may be ensured. There are three evaluation levels of fiscal policy morality which relate fiscal policy efficiency of the current generation to its ability to cover the public debt: debt redemption periods of 1, 2, and 3 generations. The fairest generationally responsible fiscal policy is that the public debt morality index does not exceed 1, i.e., public debt should be redeemed within the average lifetime of politically active persons. Marginal debt redemption criterion, i.e., debt redemption level of 3 generations, pertains to potential human lifetime (a 100 years), and to the currently applicable political period of national secret preservation (may amount to 75 years). Thus the marginal level of political responsibility is linked with the fiscal policy responsibility level.Upon the USA’s, Japan’s, and the EU’s public debt evaluation, it was determined that the EU’s Inter-Generational Debt Morality index is closest to the debt redemption level of 3 generations. Among EU member states, only Latvia, Lithuania, Estonia, Luxemburg, and Slovenia were attributed the most responsible fiscal policy pursuing 247 group of states. Of the old member states, the Nordic countries and Ireland are distinguished as the best, the experience of which should be applied in EU fiscal policy improvement. The EU is proposed herein to availe itself of the current favorable fiscal policy situation, applying it as macroeconomic marketing means for attraction of foreign investments to the EU. The proposed criterion for fiscal policy evaluation will not ensure its efficacy if there is no political willingness. • The author proposes to improve weaker (in terms of debt redemption) states’ debt through special EU funds. Of course this needs formulating exact rules of debt redemption. States with better debt redemption positions (the new EU countries included) could help the lower performing states (the old ones) to solve their fiscal problems.
