Before the G20 summit in Cannes: IZA researchers propose concept for a global debt brake
A few days before the G20 summit in Cannes, economists from the Institute for the Study of Labor (IZA) in Bonn, Germany, have proposed a global consolidation strategy of public finances. In a new IZA Policy Paper entitled "A challenge for the G20: Globally stipulated debt brakes and transnational independent fiscal supervisory councils," Mathias Dolls, Andreas Peichl and Klaus F. Zimmermann recommend that political leaders of the G20 countries implement a global debt brake to push the process of consolidation of public finances and make it binding. To ensure this, the debt brakes should be fixed in national constitutions and enforced by transnational independent fiscal supervisory councils. The researchers point out that the debt brake is an important instrument for a long-lasting solution of the sovereign debt crisis.