The Finance Ministry’s inaugural Fiscal Policy Seminar took place in Berlin on 13-14 December 2018. The two-day event brought together experts from academia, central banks and government ministries – and hailing from a total of 14 countries – to discuss the role that well-functioning and stable financial markets play in fostering sound fiscal policies. The seminar, titled “Rethinking Market Discipline”, placed a spotlight on issues such as the creation of international insolvency procedures for states; spillover effects in monetary unions; and institutional and market solutions to moral hazard. It also focused on specific cases such as the causes of the debt crisis in Puerto Rico.

A call for papers was disseminated prior to the seminar, and the most outstanding of these contributions was awarded a prize of €5,000 at the event. In 2018, the “Best Paper Award” was presented to co-authors Benjamin Born (Frankfurt School of Finance and Management), Gernot J. Müller (University of Tübingen), Johannes Pfeifer (University of Cologne) and Susanne Wellmann (University of Tübingen). Their paper shows that financial markets have disciplinary effects on the actions that governments take. For example, risk-adjusted interest rates provide governments with incentives to consolidate their finances and thereby to pursue sustainable budget policies.

An independent scientific committee chaired by Andreas Peichl (ifo Institute, University of Munich) reviewed the papers prior to the event and selected the winning contribution. The Finance Ministry plans to host the Fiscal Policy Seminar on an annual basis.