IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/516.html
   My bibliography  Save this paper

Fiscal Rules in the European Monetary Union: A No-Entry Clause

Author

Listed:
  • Giovannini, Alberto
  • Spaventa, Luigi

Abstract

The paper examines the possible motivations behind the plea for fiscal rules in the Delors Report. We argue that coordination problems arising from aggregate demand spillovers cannot be solved by means of budget rules and that in any case they are not important in Europe. We then discuss the notion of structural fiscal imbalances and show that potential solvency is a problem for some European countries, probably made more severe by EMU. Membership of countries with unsustainable positions may represent a risk for the stability of the union because of financial spillovers. Neither monetary discipline enforced by a `conservative' European Central Bank nor market discipline will by themselves prevent fiscal indiscipline or insulate the union from its consequences. Specific sanctions are needed to affect political choices by creating a trade-off between debt and monetary stability. The most effective sanction in our view would be a no-entry clause, such that membership is made contingent upon specifically defined changes in the fiscal positions of the countries concerned.

Suggested Citation

  • Giovannini, Alberto & Spaventa, Luigi, 1991. "Fiscal Rules in the European Monetary Union: A No-Entry Clause," CEPR Discussion Papers 516, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:516
    as

    Download full text from publisher

    File URL: http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=516
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Robert Holzmann & Yves Hervé & Roland Demmel, 1996. "The maastricht fiscal criteria: Required but ineffective?," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 23(1), pages 25-58, February.
    2. Varadarajan V. Chari & Patrick J. Kehoe, 2008. "Time Inconsistency and Free-Riding in a Monetary Union," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(7), pages 1329-1356, October.
    3. Jérôme Creel & Henri Sterdyniak, 1995. "Les déficits publics en Europe," SciencePo Working papers Main hal-03458224, HAL.
    4. repec:hal:spmain:info:hdl:2441/2965 is not listed on IDEAS
    5. repec:hal:spmain:info:hdl:2441/1826 is not listed on IDEAS
    6. Heinemann, Friedrich, 1994. "Verschuldungsanreize in der Wirtschafts- und Währungsunion," ZEW Discussion Papers 94-02, ZEW - Leibniz Centre for European Economic Research.
    7. Jérôme Creel & Henri Sterdyniak, 1995. "Les déficits publics en Europe. Causes, conséquences ou remèdes à la crise ?," Revue Économique, Programme National Persée, vol. 46(3), pages 645-656.
    8. M. Mar㈠& M. Sarcinelli, 1994. "The European Union: how to assign the functions of government," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 47(191), pages 341-377.
    9. F. Passacantando, 1996. "Building an institutional framework for monetary stability: the case of Italy (1979-1994)," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 49(196), pages 83-132.
    10. F. Passacantando, 1996. "Building an institutional framework for monetary stability: the case of Italy (1979-1994)," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 49(196), pages 83-132.
    11. Paul R. Bergin, "undated". "Price Level Determination In A Heterogeneous Monetary Union," Department of Economics 97-12, California Davis - Department of Economics.
    12. Catherine Bruno & Jacques Le Cacheux & Catherine Mathieu, 1991. "L'Union monétaire européenne : état des lieux, projets et enjeux," Revue de l'OFCE, Programme National Persée, vol. 38(1), pages 93-142.
    13. Mr. Anthony J. Pellechio & Saqib Rizavi & Phebby Kufa, 2003. "Fiscal Sustainability and Policy Issues in the Eastern Caribbean Currency Union," IMF Working Papers 2003/162, International Monetary Fund.
    14. M. Mar㈠& M. Sarcinelli, 1994. "The European Union: how to assign the functions of government," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 47(191), pages 341-377.
    15. repec:spo:wpmain:info:hdl:2441/2965 is not listed on IDEAS
    16. Jacques Mélitz, 1991. "Brussels on a single money," Open Economies Review, Springer, vol. 2(3), pages 323-336, October.
    17. repec:spo:wpmain:info:hdl:2441/1826 is not listed on IDEAS

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:516. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.cepr.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.