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Set in Stone? Conflict and Continuity Over the European Union’s Measurement of Government Debt

The Maastricht definition of government debt constitutes a central pillar of the European fiscal governance architecture. When EU member states agreed on the definition as part of the euro convergence criteria, they took a narrow approach to debt. The 2008 financial crisis and later the euro area crisis forced governments to engage in large debt increasing bank bailouts, revealing gaps in the debt definition. Growing dissatisfaction with the outdated Maastricht indicators opened a window of opportunity for reform but the debt definition remained unchanged. We explain this puzzling indicator inertia by drawing on historical institutionalism. Examining the conflictual history of the EU’s debt measure, we show how the revision of the debt definition failed precisely due to its political charge and centrality in the EU fiscal surveillance framework. It also demonstrates that this path dependence enabled the European Commission to establish new fiscal sustainability indicators accounting for the implicit liabilities not captured by the narrow debt definition.