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The framework for fiscal policy in EMU: What future after five years of experience?

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  • Elena Flores
  • Gabriele Giudice
  • Alessandro Turrini

Abstract

This paper reviews the first five years of experience with the working of the EMU framework for fiscal policy in EMU. It is argued that the balance with the fiscal framework of EMU so far is mixed. The EMU framework has contributed to avoid large fiscal imbalances in EU Member States and has evolved continuously to deal with a number of budgetary challenges connected to the conduct of fiscal policy and the assessment of budgetary developments in the short, medium and long run. However, problems with the implementations of the rules have emerged, and the ownership of the framework should be re-established. We argue in favour of further improvements within the framework of the Treaty along the following directions:Â increased focus on debt and sustainability; better account of country-specific factors in the definition of medium-term targets; better enforcement of the rules; improved implementation of the excessive deficit procedure; greater account of the Lisbon goals in applying the EMU framework for economic policy co-ordination and budgetary surveillance.

Suggested Citation

  • Elena Flores & Gabriele Giudice & Alessandro Turrini, 2005. "The framework for fiscal policy in EMU: What future after five years of experience?," European Economy - Economic Papers 2008 - 2015 223, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    • Handle: RePEc:euf:ecopap:0223
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    References listed on IDEAS

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    Cited by:

    1. Pierre Richard Agénor & Devrim Yilmaz, 2006. "The Tyranny of Rules: Fiscal Discipline, Productive Spending, and Growth," Economics Discussion Paper Series 0616, Economics, The University of Manchester.
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    3. Fritz Breuss, 2009. "10 Jahre WWU – Erfolge, Schwächen und Herausforderungen," WIFO Monatsberichte (monthly reports), WIFO, vol. 82(1), pages 61-84, January.
    4. Dritan Shoraj & Marionela Memetaj, 2017. "Impact of Leadership versus Organizational Effectiveness in the Secondary Banking Sector in Albania," European Journal of Economics and Business Studies Articles, Revistia Research and Publishing, vol. 3, May - Aug.
    5. Fritz Breuss, 2009. "Ten Years of EMU – Achievements, Weaknesses, Challenges," Austrian Economic Quarterly, WIFO, vol. 14(1), pages 49-72, April.
    6. Leopold Diebalek & Walpurga Köhler-Töglhofer & Doris Prammer, 2006. "Reform of the Stability and Growth Pact," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue Q1/06, pages 78-109.
    7. Ferré, Montserrat, 2012. "The effects of uncertainty about countries’ compliance with the Stability and Growth Pact," Journal of Policy Modeling, Elsevier, vol. 34(5), pages 660-674.
    8. Leopold Diebalek & Doris Prammer, 2006. "Reform of the Stability and Growth Pact," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 78-109.
    9. P R Agénor & D Yilmaz, 2006. "The Tyranny of Rules: Fiscal Discipline, Productive Spending, and Growth," Centre for Growth and Business Cycle Research Discussion Paper Series 73, Economics, The University of Manchester.
    10. Ana Sabic, 2006. "Reform of the Stability and Growth Pact," Financial Theory and Practice, Institute of Public Finance, vol. 30(3), pages 283-293.
    11. Abdul Hadi, 2017. "Dams and Displacement in Turkey and Pakistan," European Journal of Economics and Business Studies Articles, Revistia Research and Publishing, vol. 3, May - Aug.

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