The “New” Stability and Growth Pact: More Flexible, Less Stupid?
Since the beginning of the European single currency project, the adoption of fiscal binding rules, restraining the use of the single policy instrument left for national authorities, has been challenged by many authors and politicians. The discussion has been rekindled in recent years, following a period of economic recession or stagnation in several Member-Countries and some criticisms linking the Stability and Growth Pact (SGP) to the general economic situation. Some of the questions raised by those who criticised the initial framework for fiscal discipline may have been taken into account in the recent revision of the SGP (March 2005), which followed the suspension of the Pact for Germany and France and eventually made the SGP more flexible and “less stupid”. In this paper, we evaluate the changes contained in the “new” SGP, by taking account of the properties for ideal fiscal rules put forward by Kopits and Symansky (1998) and comparing with some recently published studies on the same topic. The main result of our analysis points towards a clear increase in flexibility together with the probable emergence of new enforcement problems. In this context, an insufficient output in terms of fiscal discipline could arise, leading to the need for new improvements within the European framework for the definition and implementation of national fiscal policies.
|Date of creation:||Jul 2006|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.fep.up.pt/
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.:
- Alessandra Casella, 1999.
"Tradable Deficit Permits: Efficient Implementation of the Stability Pacin the European Monetary Union,"
NBER Working Papers
7278, National Bureau of Economic Research, Inc.
- Alessandra Casella, 1999. "Tradable deficit permits:efficient implementation of the Stability Pact in the European Monetary Union," Economic Policy, CEPR;CES;MSH, vol. 14(29), pages 321-362, October.
- Muscatelli, V. Anton & Tirelli, Patrizio & Trecroci, Carmine, 2004.
"Fiscal and monetary policy interactions: Empirical evidence and optimal policy using a structural New-Keynesian model,"
Journal of Macroeconomics,
Elsevier, vol. 26(2), pages 257-280, June.
- Anton Muscatelli & Patrizio Tirelli & Carmine Trecroci, 2003. "Fiscal and Monetary Policy Interactions: Empirical Evidence and Optimal Policy Using a Structural New Keynesian Model," CESifo Working Paper Series 1060, CESifo Group Munich.
- Jurg Niehans, 1968. "Monetary and Fiscal Policies in Open Economies under Fixed Exchange Rates: An Optimizing Approach," Journal of Political Economy, University of Chicago Press, vol. 76, pages 893.
- Tabellini, Guido, 1990.
"Domestic politics and the international coordination of fiscal policies,"
Journal of International Economics,
Elsevier, vol. 28(3-4), pages 245-265, May.
- Tabellini, Guido, 1988. "Domestic Politics and the International Coordination of Fiscal Policies," CEPR Discussion Papers 226, C.E.P.R. Discussion Papers.
- Guido Tabellini, 1988. "Domestic Politics and the International Coordination of Fiscal Policies," UCLA Economics Working Papers 529, UCLA Department of Economics.
- Uhlig, Harald, 2002. "One Money, but Many Fiscal Policies in Europe: What Are the Consequences?," CEPR Discussion Papers 3296, C.E.P.R. Discussion Papers.
- Willem H. Buiter, 2006.
"The 'Sense and Nonsense of Maastricht' Revisited: What Have we Learnt about Stabilization in EMU?,"
Journal of Common Market Studies,
Wiley Blackwell, vol. 44, pages 687-710, November.
- Buiter, Willem H., 2005. "The 'Sense and Nonsense of Maastricht' Revisited: What Have We Learnt About Stabilization In EMU?," CEPR Discussion Papers 5405, C.E.P.R. Discussion Papers.
- Hamada, Koichi, 1976. "A Strategic Analysis of Monetary Interdependence," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 677-700, August.
- Buiter, Willem H. & Corsetti, Giancarlo & Roubini, Nouriel, 1992.
"`Excessive Deficits': Sense and Nonsense in the Treaty of Maastricht,"
CEPR Discussion Papers
750, C.E.P.R. Discussion Papers.
- Buiter, W.H. & Corsetti, G. & Roubini, N., 1992. "Excessive Deficits: Sense and Nonsence in the Treaty of Maastricht," Papers 674, Yale - Economic Growth Center.
- Eijffinger, S.C.W. & Buti, M. & Franco, D., 2003.
"Revisiting EMU's stability pact : A pragmatic way forward,"
Other publications TiSEM
2074fa3c-362a-4366-a649-5, Tilburg University, School of Economics and Management.
- Marco Buti & Sylvester Eijffinger & Daniele Franco, 2003. "Revisiting EMU's Stability Pact: A Pragmatic Way Forward," Oxford Review of Economic Policy, Oxford University Press, vol. 19(1), pages 100-111.
- Uhlig, H.F.H.V.S., 2002. "One Money, But Many Fiscal Policies in Europe : What are the Consequences?," Discussion Paper 2002-32, Tilburg University, Center for Economic Research.
- 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.
- 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).
- Buti, Marco & Eijffinger, Sylvester C W & Franco, Daniele, 2005.
"The Stability Pact Pains: A Forward-Looking Assessment of the Reform Debate,"
CEPR Discussion Papers
5216, C.E.P.R. Discussion Papers.
- Buti, M. & Eijffinger, S.C.W. & Franco, D., 2005. "The Stability pact Pains : A Forward-Looking Assessment of the Reform Debate," Discussion Paper 2005-101, Tilburg University, Center for Economic Research.
- George Kopits & Steven A. Symansky, 1998. "Fiscal Policy Rules," IMF Occasional Papers 162, International Monetary Fund.
- Marcus Miller & Mark Salmon, 1985. "Policy Coordination and Dynamic Games," NBER Chapters, in: International Economic Policy Coordination, pages 184-227 National Bureau of Economic Research, Inc.
- Simon Wren-Lewis, 2003. "Changing the Rules," New Economy, Institute for Public Policy Research, vol. 10(2), pages 73-78, 06.
- Brunila, Anne, 2002. "Fiscal policy: Coordination, discipline and stabilisation," Research Discussion Papers 7/2002, Bank of Finland.
- Frankel, Jeffrey A & Rockett, Katharine E, 1988. "International Macroeconomic Policy Coordination When Policymakers Do Not Agree on the True Model," American Economic Review, American Economic Association, vol. 78(3), pages 318-40, June.
When requesting a correction, please mention this item's handle: RePEc:por:fepwps:218. 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.