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Reforming the Stability and Growth Pact


  • Anthony M Annett
  • Jörg Decressin
  • Michael Deppler


A rules-based fiscal framework, such as the EU’s Stability and Growth Pact (SGP), can be an important bulwark against short-sighted policies. Although policies have improved following the SGP’s adoption, shortcomings remain. These, however, are rooted in the policies rather than the rules, where few changes seem necessary. Specifically, the Excessive Deficit Procedure needs a stronger focus on policies rather than outcomes, while staying operationally simple and transparent. Furthermore, reforms are needed to foster time-consistent national policies, budgetary transparency, and ownership of the Pact. Accordingly, parliaments should debate national Stability Programs and national fiscal councils should review these programs for parliaments.

Suggested Citation

  • Anthony M Annett & Jörg Decressin & Michael Deppler, 2005. "Reforming the Stability and Growth Pact," IMF Policy Discussion Papers 05/2, International Monetary Fund.
  • Handle: RePEc:imf:imfpdp:05/2

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    References listed on IDEAS

    1. Henning Bohn, 1998. "The Behavior of U. S. Public Debt and Deficits," The Quarterly Journal of Economics, Oxford University Press, vol. 113(3), pages 949-963.
    2. Oya Celasun & Xavier Debrun & Jonathan D. Ostry, 2006. "Primary Surplus Behavior and Risks to Fiscal Sustainability in Emerging Market Countries: A "Fan-Chart" Approach," IMF Staff Papers, Palgrave Macmillan, vol. 53(3), pages 1-3.
    3. Alesina, Alberto & Hausmann, Ricardo & Hommes, Rudolf & Stein, Ernesto, 1999. "Budget institutions and fiscal performance in Latin America," Journal of Development Economics, Elsevier, vol. 59(2), pages 253-273, August.
    4. Barro, Robert J, 1979. "On the Determination of the Public Debt," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 940-971, October.
    5. Beck, Thorsten & Clarke, George & Groff, Alberto & Keefer, Philip & Walsh, Patrick, 2000. "New tools and new tests in comparative political economy - the database of political institutions," Policy Research Working Paper Series 2283, The World Bank.
    6. W. J. Henisz, 2000. "The Institutional Environment for Economic Growth," Economics and Politics, Wiley Blackwell, vol. 12(1), pages 1-31, March.
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    Cited by:

    1. Ludek Kouba & Michal Madr & Danuse Nerudova & Petr Rozmahel, 2016. "Policy Autonomy, Coordination or Harmonization in the Persistently Heterogeneous European Union?," DANUBE: Law and Economics Review, European Association Comenius - EACO, issue 1, pages 53-71, March.
    2. Anthony M Annett, 2006. "Enforcement and the Stability and Growth Pact; How Fiscal Policy Did and Did Not Change Under Europe’s Fiscal Framework," IMF Working Papers 06/116, International Monetary Fund.
    3. Erik J. Lundback, 2008. "Medium-Term Budgetary Frameworks - Lessons for Austria from International Experience," IMF Working Papers 08/163, International Monetary Fund.


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