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Reform of the Stability and Growth Pact


  • Ana Sabic

    (Croatian National Bank, Zagreb)


In conditions of the single monetary policy and the decentralised fiscal policy in the European Monetary Union (EMU) it is necessary for the coordination of macroeconomic policy to be strengthened. The Treaty on European Union imposes conditions that relate to the size of the budgetary deficit and the public debt as criteria for the introduction of the euro in a given country. The Stability and Growth Pact (SGP) sets the fiscal framework of the European Monetary Union based on rules underpinned by these criteria. Thus the SGP, as a kind of economic policy-coordination mechanism, has the task of ensuring fiscal discipline among the Member States of the EMU. The objective of this paper is to describe the recent reform of the Stability and Growth Pact that arose as a result of deficiencies observed in the original version of the Pact of 1997.

Suggested Citation

  • Ana Sabic, 2006. "Reform of the Stability and Growth Pact," Financial Theory and Practice, Institute of Public Finance, vol. 30(3), pages 283-293.
  • Handle: RePEc:ipf:finteo:v:30:y:2006:i:3:p:283-293

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    References listed on IDEAS

    1. Buti, Marco & Eijffinger, Sylvester C.W. & Franco, Daniele, 2003. "Revisiting the stability and growth pact: grand design or internal adjustment?," Seminarios y Conferencias 6567, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    2. 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.
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    More about this item


    Stability and Growth Pact; European Monetary Union; coordination of monetary and fiscal policy; fiscal rules;

    JEL classification:

    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures


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