Maastricht Criteria versus Stability Pact
AbstractIt is generally believed that fiscal consolidations should occur prior to a country's admission to the European Monetary Union (EMU). This paper argues that the fiscal Maastricht Criteria require badly timed, costly adjustments while not guaranteeing sustained fiscal restraint. An effective Stability Pact is not only necessary, but should replace the Maastricht Criteria altogether. These conclusions are based on simulations scrutinising the effects both of contractionary fiscal policies and of joining a monetary union. In a case study type analysis it is shown that there is a strong case for both policy changes to happen at the same time.
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 InfoPaper provided by School Of Economics, University College Dublin in its series Working Papers with number 200506.
Length: 40 pages
Date of creation: 13 Mar 2005
Date of revision:
transition to a monetary union; fiscal policy; European Monetary Union; regime change; simulation; MULTIMOD;
Other versions of this item:
- E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
- F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
- F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Alberto Alesina & Roberto Perotti, 1995. "Fiscal Expansions and Fiscal Adjustments in OECD Countries," NBER Working Papers 5214, National Bureau of Economic Research, Inc.
- repec:fth:coluec:754 is not listed on IDEAS
- Hughes Hallett, Andrew & Lewis, John, 2004. "Hansa vs Habsburg: Debt, Deficits and the Entry of Accession Countries into the Euro," CEPR Discussion Papers 4500, C.E.P.R. Discussion Papers.
- Hughes Hallett, A J & Vines, D, 1993. "On the Possible Costs of European Monetary Union," The Manchester School of Economic & Social Studies, University of Manchester, vol. 61(1), pages 35-64, March.
- Alesina, Alberto & Perotti, Roberto, 1995. "Taxation and redistribution in an open economy," European Economic Review, Elsevier, vol. 39(5), pages 961-979, May.
- Mitchell, Peter R. & Sault, Joanne E. & Smith, Peter N. & Wallis, Kenneth F., 1998. "Comparing global economic models," Economic Modelling, Elsevier, vol. 15(1), pages 1-48, January.
- Gilles Oudiz & Jeffrey Sachs, 1984. "International Policy Coordination in Dynamic Macroeconomic Models," NBER Working Papers 1417, National Bureau of Economic Research, Inc.
- JÃ¼rgen Hagen & Stefan Lutz, 1996. "Fiscal and monetary policy on the way to EMU," Open Economies Review, Springer, vol. 7(4), pages 299-325, October.
- Mitchell, Peter R. & Sault, Joanne E. & Wallis, Kenneth F., 2000. "Fiscal policy rules in macroeconomic models: principles and practice," Economic Modelling, Elsevier, vol. 17(2), pages 171-193, April.
- Carol Corrado & Joe Mattey, 1997. "Capacity Utilization," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 151-167, Winter.
- Paul Masson & Jacques Melitz, 1991. "Fiscal policy independence in a European Monetary Union," Open Economies Review, Springer, vol. 2(2), pages 113-136, June.
- Ferré, Montserrat, 2008. "Fiscal policy coordination in the EMU," Journal of Policy Modeling, Elsevier, vol. 30(2), pages 221-235.
- 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 Univeristy of Manchester.
- 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.
- Ferré Carracedo, Montserrat, 2011. "The effects of uncertainty about countries' compliance with the Stability and Growth Pact," Working Papers 2072/169686, Universitat Rovira i Virgili, Department of Economics.
- Halkos, George E. & Tzeremes, Nickolaos G., 2009. "Economic efficiency and growth in the EU enlargement," Journal of Policy Modeling, Elsevier, vol. 31(6), pages 847-862, November.
- Luigi Bonatti & Annalisa Cristini, 2007.
"Breaking the stability pact: was it predictable?,"
Department of Economics Working Papers
0714, Department of Economics, University of Trento, Italia.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Nicolas Clifton).
If references are entirely missing, you can add them using this form.