Revisiting Fiscal Responsibility Norms: A Cross Country Analysis of the Impact of COVID-19

In this paper, we have reviewed the COVID induced shock to debt and deficit profiles of 10 largest economies by size GDP in 2019 referred paper as Big-10 economies. There is a sharp upsurge their government debt-GDP ratios because policy responses recession been large fiscal stimuli based on borrowing. With low often negative growth rates high deficit, are projected rise sharply these As normalcy restored, countries may attempt reduce borrowing levels relative GDP. However, argue that before done, individual do well reassess sustainability norms whether cast terms agreements such Maastricht Treaty or country level Fiscal Responsibility Legislations (FRLs) other similar norms. This revision called for longer-term trends rising money supply, falling nominal interest rate. The contribution article lies highlighting existing FRL become dated European significant changes macro parameters rate, long-term rate compared time when were originally determined. thus need now re-determine which be higher than current levels. Even though, some recent literature suggests benchmarks shifted upwards, post exceeded revised margins case number