Olivier, great point. But why does it not apply to the EU, which has an even more disfunctional budget process - one where adjustment may depend on credibility of a threat by ECB that involves, at worst, blowing up the Euro?
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Olivier Blanchard: 3/ Step 2. Assess how likely it is that the budget process will deliver the necessary adjustment. This depends on the formal institutions, on the existing fiscal rules if any, and the larger political dynamics. Hard but necessary to assess.
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🐦🔗: https://n.respublicae.eu/lugaricano/status/1687750119163117568