The stability and growth pact : an eventful history
AbstractWhen it was adopted in 1997 the stability and growth pact was considered as one of the cornerstones of the European monetary union. However, against the background of the economic downturn starting at the turn of the century, this perception changed and some observers criticised the pact for unduly constraining governments’ fiscal room for manoeuvre. This sparked a long debate on the appropriateness of the fiscal rules in the monetary union that has finally ended in March 2005 when a political agreement was reached in the Council of the European Union that announces substantial changes to the pact. This article first recalls the reasons for fiscal rules, especially in a monetary union with a fragmented budgetary policy, and the main provisions of the original pact. It then shows that despite the strengthening of the fiscal rules nearly all EU-15 Member States have significantly relaxed budgetary discipline after 1997, i.e. the year in which compliance with the Maastricht convergence criteria was tested, which led to significant budgetary slippages in a number of countries. It is argued that this is due to specific institutional, political and statistical factors. Finally, the reform of the pact is assessed. Without prejudging the application of the new framework, the fiscal rules are found to be significantly weakened and there is a clear shift towards a more judgement-based institutional framework.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by National Bank of Belgium in its journal Economic Review.
Volume (Year): (2005)
Issue (Month): II (June)
Contact details of provider:
Postal: Boulevard de Berlaimont 14, B-1000 Bruxelles
Phone: (+ 32) (0) 2 221 25 34
Fax: (+ 32) (0) 2 221 31 62
Web page: http://www.nbb.be/
More information through EDIRC
Stability and growth pact; fiscal rules; European monetary policy;
Find related papers by JEL classification:
- E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
- E59 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Other
- H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
- H69 - Public Economics - - National Budget, Deficit, and Debt - - - Other
- H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.