Gauging by numbers: a first attempt to measure the quality of public finances in the EU

Ensuring high quality of public finances (QPF) with a view to supporting long-term economic growth has gained new urgency as the room for fiscal manoeuvre has shrunk in light of the current crisis.To more systematically analyse QPF and compare developments across countries and over time, a greater focus on identifying and developing comparable QPF indicators is needed. This paper provides a first attempt in this respect. Based on the view that QPF is a multi-dimensional concept, it creates composite indicators for twelve areas of public finances that are linked to long-term economic growth. While the proposed alternative calculation methods yield relatively robust results and findings are in line with conventional wisdom, due to data problems the composite indicators should only be seen as a useful starting point for identifying a country's main strengths and weaknesses in QPF. This would need to be complemented by qualitative analysis that also accounts for country and other specificities.

Read this report from the EC here.

The EU's response to support the real economy during the economic crisis: an overview of Member States' recovery measures

This paper provides a preliminary assessment of the adequacy of Member States' recovery plans supporting the real economy - labour markets and vulnerable groups; investment; and businesses (but not financial sector support measures). It looks in particular at the time-consistency of the short-term measures designed to avert major dislocations of economic activity and assesses the compatibility of the short-term crisis response with the European Union's long-term policy objectives under the Lisbon strategy. The main finding is that the European Union's response to the crisis is strong and, at the current juncture, appears adequate and that measures being pursued under Member States' recovery plans are for the most part in line with the principles and guidelines enunciated in the European Economic Recovery Plan.

Read this report from the EC, Economic and Financial Affairs, here.

China shows the world how to get through a crisis

Read Jim O'Neill's column in the FT here.