European Trade Union Institute, ETUI.

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9 October 2015

New ETUI policy brief advocates golden rule of public investment

A new ETUI policy brief proposes the implementation of a well-known in economic literature 'Golden Rule of Public Investment', to stimulate growth in Europe.

This rule states that net public investments - increases of the public and/or social capital stock providing future benefits, should be financed by debt, and therefore excluded from balanced-budget rules.

The new European Economic Governance fiscal policies had a detrimental effect on public investments in the European member states in recent years.

See OECD Economic Outlook Volume 2015/1

fiscal policies effects on public investments in Europe

According to the authors Georg Feigl (economist at the Chamber of Labour, Austria) and Achim Truger (professor at the Berlin School of Economics and Law and senior research fellow at the Macroeconomic Policy Institute, Dusseldorf) the introduction of a 'Golden Rule of Public Investment’ in Europe provides an argument for public investment as an essential element of the public spending.

The Golden Rule will produce results in the medium-long run, rather than boosting the economy in the short-term.

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