This paper explores the functioning of the EMU Stability and Growth Pact from 1999 to 2005, year of its first explicit reform. The causes and the principal axes of that reform are analysed, as well as the main arguments for defending or critizising it. As to the Pact’s prior functioning, for almost all small and medium Euro area states this is a success story and the reform appears apt to facilitate the Pact’s future implementation. As to the larger Member States, the Pact experience has been a history of non-observance which the Pact’s reform appears only to condone and abet. This contradictory experience leads to a negative judgement on the functioning of the SGP as a whole. But recognising the success of the compliers’ group, and not only the failure of the non-compliers, justifies the Pact’s basic logic, as against certain commonly heard indictments. It permits to sharpen the analysis. These points will be explored later in this paper.
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Paper provided by CEPII research center in its series Working Papers with number
2006-06.
Find related papers by JEL classification: E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
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