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Evaluating the reform of the stability and growth pact: new and better?

Author

Listed:
  • Rui Henrique Alves

    (Universidad de Oporto)

  • Oscar Afonso

    (Universidad de Oporto)

Abstract

In spite of the recent reform of the Stability and Growth Pact (SGP) and the fact that some of the questions raised by those who criticised the initial framework for fiscal discipline may have been considered, the discussion on the implementation of binding fiscal rules in the European Monetary Union is still a matter of important controversy in both academic and political fields. The objective of this paper is to evaluate the changes contained in the reformed SGP by taking into consideration the properties for “ideal” fiscal rules put forward by Kopits and Symansky. Our analysis points towards a clear increase in flexibility together with the probable emergence of new enforcement problems and no advances in terms of the coordination of more effective fiscal policies. In this context, we discuss the need for new improvements within the European framework for the definition and implementation of national fiscal policies.

Suggested Citation

  • Rui Henrique Alves & Oscar Afonso, 2008. "Evaluating the reform of the stability and growth pact: new and better?," EKONOMIAZ. Revista vasca de Economía, Gobierno Vasco / Eusko Jaurlaritza / Basque Government, vol. 67(01), pages 392-409.
    • Handle: RePEc:ekz:ekonoz:2008121
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    References listed on IDEAS

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    1. Uhlig, H.F.H.V.S., 2002. "One Money, But Many Fiscal Policies in Europe : What are the Consequences?," Other publications TiSEM f2cdcc6c-329f-4ae6-915b-2, Tilburg University, School of Economics and Management.
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    More about this item

    Keywords

    EMU; SGP; fiscal discipline; fiscal rules;
    All these keywords.

    JEL classification:

    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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