The 2024 reform of the EU fiscal framework makes fiscal adjustment more country-specific and less procyclical. However, it does not eliminate two fundamental tail risks: following a large recession, too little fiscal flexibility can generate deflationary stagnation, while too much can undermine confidence in national debt stabilisation and generate stagflation. This column shows that a Eurobond-financed common fiscal capacity can mitigate both tail risks. Under this proposal, stabilisation of exceptional common shocks is shifted to the euro-area level while responsibility for national debt remains firmly national.



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