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Governing European Union To Financial Stability


  • Ion-Lucian CATRINA

    () (Academy of Economic Studies, Bucharest, Romania)


In the last four years, a significant part of the European Union members has recorded a real decline in the sustainability of their public debt. The failure of Greece, Italy, Belgium or Spain to easily find funding at previous interest rates has induced the fear that the European Monetary Union would disintegrate. Such as scenario is not realistic because does not take into account the economic interdependencies that have been created between the countries participating at the monetary zone. Nevertheless, we can say that the Stability and Growth Pact which aimed towards the coordination of national fiscal policies for ensuring the stability and prudence of the budgetary climate, has failed. This failure was primarily due to the lack of specific sanctions for those members that have not fought against the fiscal imbalances and secondly to the stopping the steps forward towards a common fiscal policy. Thus, we can say that the European Monetary Union is driven now by the wrong rule of “no taxation with representation”. For these reasons, this paper aims at showing that the European fiscal federalism is still far away from becoming reality and that the new instruments chosen for the new stability of the European Monetary Union will be the task of the Member States themselves. This paper will also review the main rules that are projected to be the source for the future European financial stability and growth: the balanced budgets and the deficits built only on the “Golden Rule” premises, for which other amendments on European Treaties are expected.

Suggested Citation

  • Ion-Lucian CATRINA, 2012. "Governing European Union To Financial Stability," Scientific Bulletin - Economic Sciences, University of Pitesti, vol. 11(1), pages 35-42.
  • Handle: RePEc:pts:journl:y:2012:i:1:p:35-42

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    References listed on IDEAS

    1. Fabrizio Balassone & Daniele Franco, 2004. "EMU fiscal rules: new answers to old questions?," Chapters, in: Giuseppe Eusepi & Friedrich Schneider (ed.), Changing Institutions in the European Union, chapter 1, Edward Elgar Publishing.
    2. Talvi, Ernesto & Vegh, Carlos A., 2005. "Tax base variability and procyclical fiscal policy in developing countries," Journal of Development Economics, Elsevier, vol. 78(1), pages 156-190, October.
    3. Fabrizio Balassone & Daniele Franco, 2000. "Public investment, the Stability Pact and the ‘golden rule’," Fiscal Studies, Institute for Fiscal Studies, vol. 21(2), pages 207-229, June.
    4. J. E. Meade, 1958. "Is The National Debt A Burden?," Oxford Economic Papers, Oxford University Press, vol. 10(2), pages 163-183.
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    Cited by:

    1. Florin-Alexandru MACSIM, 2015. "How Should A Fiscal Union For Emu Look Like?," Journal of Public Administration, Finance and Law, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 0(Special i), pages 79-88, September.

    More about this item


    nominal convergence; golden rule; deficits; public debt;

    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
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt


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