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The SGP: Delicate Balance or Albatross?

In: The Stability and Growth Pact

Author

Listed:
  • Matthew B. Canzoneri
  • Behzad T. Diba

Abstract

The Stability and Growth Pact tried to strike a delicate balance. On the one hand, it imposed constraints on national fiscal policy that were deemed necessary to protect the new European Central Bank (ECB) from outside pressures, especially during the period in which it tried to establish credibility.1 At the same time, the Pact allowed some flexibility for a counter-cyclical fiscal policy. This too was deemed necessary in European Monetary Union (EMU): a stable ECB policy might be expected to create stable macroeconomic conditions for the euro zone as a whole, but it could not be expected to iron out regional cyclical imbalances. Did the Pact strike a workable balance? Or is the Pact an unnecessary albatross that could seriously hamper the whole EMU project?

Suggested Citation

  • Matthew B. Canzoneri & Behzad T. Diba, 2001. "The SGP: Delicate Balance or Albatross?," Palgrave Macmillan Books, in: Anne Brunila & Marco Buti & Daniele Franco (ed.), The Stability and Growth Pact, chapter 3, pages 53-74, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-62926-4_3
    DOI: 10.1057/9780230629264_3
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    Citations

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    Cited by:

    1. Michal Mackiewicz, 2007. "Making the Stability Pact More Flexible: Does It Lead to Pro-Cyclical Fiscal Policies?," Fiscal Studies, Institute for Fiscal Studies, vol. 28(2), pages 251-268, June.
    2. Muscatelli, Vito A. & Natale, Piergiovanna & Tirelli, Patrizio, 2012. "A simple and flexible alternative to Stability and Growth Pact deficit ceilings. Is it at hand?," European Journal of Political Economy, Elsevier, vol. 28(1), pages 14-26.
    3. Amy K. Filipek & Till Schreiber, 2010. "The Stability and Growth Pact: Past Performance and Future Reforms," Working Papers 97, Department of Economics, College of William and Mary.
    4. Olga Francová & Ermal Hitaj & John Goossen & Robert Kraemer & Andreja Lenarčič & Georgios Palaiodimos, 2021. "EU fiscal rules: reform considerations," Discussion Papers 17, European Stability Mechanism, revised 25 Oct 2021.
    5. Charles WYPLOSZ, 2006. "Deep Economic Integration: Is Europe a Blueprint?," Asian Economic Policy Review, Japan Center for Economic Research, vol. 1(2), pages 259-279, December.
    6. Fiorella Kostoris Padoa Schioppa, 2006. "The 2005 Reform of the Stability and Growth Pact: Too Little, Too Late?," Bruges European Economic Research Papers 6, European Economic Studies Department, College of Europe.
    7. Heipertz, Martin, 2003. "The Stability and Growth Pact - Not the best but better than nothing. Reviewing the debate on fiscal policy in Europe's Monetary Union," MPIfG Working Paper 03/10, Max Planck Institute for the Study of Societies.
    8. Schmidt, André, 2014. "Elemente einer Fiskalverfassung für die Eurozone," Beiträge zur Jahrestagung 2014 (Goettingen) 107394, Verein für Socialpolitik, Ausschuss für Wirtschaftssysteme und Institutionenökonomik.
    9. Lossani, Marco & Natale, Piergiovanna & Tirelli, Patrizio, 2001. "A Reform Proposal for EMU Institutions," MPRA Paper 18694, University Library of Munich, Germany.
    10. Mackiewicz, Michał, 2005. "Making The Stability Pact More Flexible: Can It Lead to Procyclical Fiscal Policies?," MPRA Paper 16033, University Library of Munich, Germany.
    11. 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.
    12. Renate Ohr & André Schmidt, 2006. "Handelbare Verschuldungsrechte zur Sicherung fiskalischer Stabilität in der Währungsunion?," Departmental Discussion Papers 128, University of Goettingen, Department of Economics.

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