In the period 2004 to 2007, Irish fiscal policy fully complied with the rules, but it was pro-cyclical, making a major contribution to the growing bubble that subsequently wreaked so much havoc. Today the presence of fiscal rules may also accommodate inappropriate stimulatory fiscal policy in both Ireland and Germany. As a result, the appropriate fiscal policy for each was very different. Based on a German fiscal “rule” of no deficits, the response of the German government in 2011 was to dramatically tighten fiscal policy. However, for both Ireland and Germany, a fiscal stimulus in 2019, while very unwise, would be within the fiscal rules.

Source: The Irish Times March 30, 2018 05:26 UTC