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Have the euro area and EU governance worked? Just the facts

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  • Ioannou, Demosthenes
  • Stracca, Livio

Abstract

We test whether the two key EU and euro area economic governance pillars, the Stability and Growth Pact and the Lisbon Strategy, have had any impact on macroeconomic outcomes. We test this proposition on a panel of 27, some of which are non-EU (control group) using a programme evaluation approach. The impact of the EU economic governance pillars is evaluated based on both the performance before and after their application as well as against the control group. We find strong and robust evidence that neither the Stability and Growth Pact nor the Lisbon Strategy have had a significant beneficial impact on fiscal and economic performance outcomes. We conclude that a profound reform of these pillars is needed to make them work in the next decade.

Suggested Citation

  • Ioannou, Demosthenes & Stracca, Livio, 2014. "Have the euro area and EU governance worked? Just the facts," European Journal of Political Economy, Elsevier, vol. 34(C), pages 1-17.
  • Handle: RePEc:eee:poleco:v:34:y:2014:i:c:p:1-17
    DOI: 10.1016/j.ejpoleco.2013.11.009
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    Cited by:

    1. Ioannou, Demosthenes & Jamet, Jean-Francois & Kleibl, Johannes, 2015. "Spillovers and euroscepticism," Working Paper Series 1815, European Central Bank.
    2. Angana Banerji & Bergljot B Barkbu & James A John & Tidiane Kinda & Sergejs Saksonovs & Hanni Schoelermann & Tao Wu, 2015. "Building a Better Union; Incentivizing Structural Reforms in the Euro Area," IMF Working Papers 15/201, International Monetary Fund.
    3. repec:spr:empeco:v:53:y:2017:i:4:d:10.1007_s00181-016-1171-8 is not listed on IDEAS
    4. Mihut Ioana-Sorina, 2015. "Challenges Of The Recent Financial Crisis Upon The European Union Economic Governance," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 3, pages 218-223, June.
    5. Chadi, Adrian, 2015. "Concerns about the Euro and happiness in Germany during times of crisis," European Journal of Political Economy, Elsevier, vol. 40(PA), pages 126-146.
    6. Gómez-Puig, Marta & Sosvilla-Rivero, Simón, 2017. "Heterogeneity in the debt-growth nexus: Evidence from EMU countries," International Review of Economics & Finance, Elsevier, vol. 51(C), pages 470-486.
    7. Libich, Jan & Nguyen, Dat Thanh & Stehlík, Petr, 2015. "Monetary exit and fiscal spillovers," European Journal of Political Economy, Elsevier, vol. 40(PA), pages 184-206.
    8. George PETRAKOS, 2014. "Economic Crisis In Greece. European And Domestic Market And Policy Failures," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 39, pages 9-33.
    9. Kollias, Christos & Papadamou, Stephanos & Psarianos, Iacovos, 2014. "Fiscal imbalances and asymmetric adjustment under Labour and Conservative governments in the UK," Research in Economics, Elsevier, vol. 68(3), pages 208-213.
    10. Blesse, Sebastian & Boyer, Pierre C. & Heinemann, Friedrich & Janeba, Eckhard & Raj, Anasuya, 2017. "European Monetary Union reform preferences of French and German parliamentarians," ZEW Discussion Papers 17-059, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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    Keywords

    Stability and Growth Pact; Lisbon Strategy; European Union; Governance; Institutions;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H6 - Public Economics - - National Budget, Deficit, and Debt
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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