The paper investigates how European fiscal authorities behaved in the last decades. We argue that the cyclically-adjusted public budget (CAPB) is a too rough indicator of the fiscal stance as a function of the two objectives of output stabilization and debt decumulation. We construct two measures of the fiscal rule (Tax Smoothing and Expenditure Smoothing) and use them as dependent variables in our econometric estimates. Under quite plausible conditions, the compliance with the 3% SGP limit could imply the renounce during a downswing not only to pursue discretionary fiscal policy but also to output stabilization by automatic stabilizers. We conclude that the objective of debt decumulation created a trade-off with the objective of output stabilization, especially for high-debt countries.
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