New Evidence on the Effectiveness of Europe's Fiscal Restrictions
This paper investigates the past effectiveness of the Maastricht Treaty (MT) and Stability and Growth Pact (SGP) in disciplining fiscal policy in the Euro zone. We estimate fiscal reaction functions for a panel of 11 members of the Euro zone including the more recent period of the reformed SGP, and compare them with fiscal responses from other “industrialized” OECD countries. Our main finding is that in contrast with the MT, the SGP has been ineffective in tackling excessive deficits in the Euro zone. Moreover, it has also not induced a countercyclical behavior of the fiscal authorities in the region. These results evince the need for reforms in Europe’s fiscal restrictions in order to restore their credibility.
|Date of creation:||Jul 2009|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: 33 01 53 68 55 00
Fax: 33 01 53 68 55 01
Web page: http://www.cepii.fr
More information through EDIRC
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.:
- Beetsma, Roel & Ribeiro, Marcos Poplawski & Schabert, Andreas, 2008. "A Comparison of Debt and Primary-deficit Constraints," CEPR Discussion Papers 6897, C.E.P.R. Discussion Papers.
- Antonio Fatás & Ilian Mihov, 2010.
"The Euro and Fiscal Policy,"
in: Europe and the Euro, pages 287-324
National Bureau of Economic Research, Inc.
- Andrew Hughes Hallett & John Lewis, 2005. "Fiscal Discipline before and after EMU - Permanent Weight Loss or Crash Diet?," Vanderbilt University Department of Economics Working Papers 0516, Vanderbilt University Department of Economics.
- Jean Pisani-Ferry, 2005. "Fiscal policy in EMU: towards a sustainability and growth pact," Working Papers 52, Bruegel.
- Claude Giorno & Pete Richardson & Deborah Roseveare & Paul van den Noord, 1995. "Estimating Potential Output, Output Gaps and Structural Budget Balances," OECD Economics Department Working Papers 152, OECD Publishing.
- Agnès Bénassy-Quéré & Marcos Poplawski Ribeiro, 2009. "Bad Weather for the Stability and Growth Pact," La Lettre du CEPII, CEPII research center, issue 286.
When requesting a correction, please mention this item's handle: RePEc:cii:cepidt:2009-13. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.