Reform of the Stability and Growth Pact: Reducing or Increasing the Nuisance?
This paper aims at providing a quantitative assessment of different proposals for reforming the Stability and Growth Pact by extending a counterfactual experiment performed in Eichengreen and Wyplosz (1998). Using estimated coefficients from a reduced form model, we simulate the path of the output gap for the largest Euro zone countries (France, Germany, Italy) after imposing limits to structural deficit according to different fiscal rules (structural deficit rules, golden rules and rules that incorporate the stock of debt). For each of these countries we can rank the different reform proposals in terms of output loss over the period considered. Our analysis has the merit of using a uniform method and hence allow a comparison across countries and across rules. The main results of the experiment, which emerge robustly, are (a), that the golden rule would be the most beneficial both using individual country's criteria and global criteria; and (b) that the status quo, the Maastricht rule, is less restrictive than many currently debated alternatives.
|Date of creation:||2005|
|Date of revision:|
|Contact details of provider:|| Postal: 69, quai d'Orsay - 75007 PARIS|
Phone: 01 44 18 54 00
Fax: 01 45 56 06 15
Web page: http://www.ofce.sciences-po.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.:
- Francesco Saraceno & Paola Monperrus-Veroni, 2004.
"A Simple Proposal for a "Debt-Sensitive Stability Pact","
Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research,
DIW Berlin, German Institute for Economic Research, vol. 73(3), pages 471-480.
- Francesco Saraceno & Paola Monperrus-Veroni, 2004. "A Simple Proposal for a 'Debt-Sensitive Stability Pact'," Macroeconomics 0406001, EconWPA.
- Barry Eichengreen & Charles Wyplosz, 1998. "The Stability Pact: more than a minor nuisance?," Economic Policy, CEPR;CES;MSH, vol. 13(26), pages 65-113, 04.
- Jerome Creel, 2003.
"Ranking Fiscal Policy Rules: the Golden Rule of Public Finance vs. the Stability and Growth Pact,"
Documents de Travail de l'OFCE
2003-04, Observatoire Francais des Conjonctures Economiques (OFCE).
- Jérôme Creel, 2003. "Ranking Fiscal Policy Rules: the Golden Rule of Public Finance vs. the Stability and Growth Pact," Sciences Po publications 2003-04, Sciences Po.
- Jérôme Creel, 2003. "Ranking Fiscal Policy Rules: the Golden Rule of Public Finance vs. the Stability and Growth Pact," Working Papers hal-00972778, HAL.
- Blanchard, Olivier J & Giavazzi, Francesco, 2004. "Improving the SGP Through a Proper Accounting of Public Investment," CEPR Discussion Papers 4220, C.E.P.R. Discussion Papers.
- Galí, Jordi & Perotti, Roberto, 2003.
"Fiscal Policy and Monetary Integration in Europe,"
CEPR Discussion Papers
3933, C.E.P.R. Discussion Papers.
- André Sapir, 2002.
"EMU in the early years: differences and credibility,"
ULB Institutional Repository
2013/8134, ULB -- Universite Libre de Bruxelles.
- Marco Buti & André Sapir, 2002. "EMU in the Early Years: Differences and Credibility," Chapters, in: EMU and Economic Policy in Europe, chapter 1 Edward Elgar Publishing.
- Buti, Marco & Sapir, André, 2001. "EMU in the Early Years: Differences and Credibility," CEPR Discussion Papers 2832, C.E.P.R. Discussion Papers.
- George Kopits & Steven A. Symansky, 1998. "Fiscal Policy Rules," IMF Occasional Papers 162, International Monetary Fund.
- 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).
- Buti, Marco & Eijffinger, Sylvester C W & Franco, Daniele, 2003. "Revisiting the Stability and Growth Pact: Grand Design or Internal Adjustment?," CEPR Discussion Papers 3692, C.E.P.R. Discussion Papers.
- Marco Buti & Sylvester Eijffinger & Daniele Franco, 2003. "Revisiting the Stability and Growth Pact: grand design or internal adjustment?," European Economy - Economic Papers 2008 - 2015 180, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
- Jordi GalÌ & Roberto Perotti, 2003. "Fiscal policy and monetary integration in Europe," Economic Policy, CEPR;CES;MSH, vol. 18(37), pages 533-572, October.
- André Sapir & Marco Buti, 2002. "EMU and economic policy in Europe: the challenge of the early years," ULB Institutional Repository 2013/8072, ULB -- Universite Libre de Bruxelles.
- Lars Calmfors & Giancarlo Corsetti, 2003. "How to Reform Europeâ€™s Fiscal Policy Framework," World Economics, World Economics, Economic & Financial Publishing, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 4(1), pages 109-116, January.
- Marco Buti & Gabriele Giudice, 2002. "Maastricht's Fiscal Rules at Ten: An Assessment," Journal of Common Market Studies, Wiley Blackwell, vol. 40(5), pages 823-848, December.
- Corsetti, Giancarlo & Devereux, Michael P. & Guiso, Luigi & Hassler, John & Saint-Paul, Gilles & Sinn, Hans-Werner & Sturm, Jan-Egbert & Vives, Xavier, 2010. "The European economy," Munich Reprints in Economics 20104, University of Munich, Department of Economics.
- Buti, Marco, 2003. "Revisiting the stability and growth pact: grand design or internal adjustment?," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 34908, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
- Willem H. Buiter & Clemens Grafe, 2004. "Patching up the Pact," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 12(1), pages 67-102, 03.
When requesting a correction, please mention this item's handle: RePEc:fce:doctra:0501. 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: (Francesco Saraceno)
If references are entirely missing, you can add them using this form.