On a Reformed Stability and Growth Pact

The Stability and Growth Pact: Problems and a Possible Solution

1. Executive Summary In this note, I describe why we need a European …scal framework. I specify what it means for a government’s …scal policy to be sustainable. I argue that while the current European …scal framework is likely to promote sustainable …scal policies, if it is enforced, it is also apt to force countries to follow suboptimal …scal policies. I explain why there is no …scal rule that...

Should Europe Get Rid of the Stability and Growth Pact?

The paper addresses the question of the abolition of the Stability and Growth Pact. More and more authors and policymakers are arising the negative impacts of the European deficit rule on the countries and their ability to respond an asymmetric economic shock. Some others are asking for a redefinition of the Pact. If the focus is only fiscal and in light of the non-respect of the Pact by two of...

Reforming the Stability and Growth Pact in Times of Crisis

It is a commonplace that the mechanisms established in the stability and growth pact are blunt instruments. They are highly politicised as both the establishment of infringements and possible sanctions are subject to votes in the EU Council. The financial crisis of 2009/10 has dramatically altered the financial situation of many EU member states and has also shown the need for new regulatory in...

The Stability and Growth Pact: Any Need for Revision?

The Stability and Growth Pact (SGP) has come in for severe criticism recently and has even been labelled "stupid" by the supposed guardian of its provisions, President of the European Commission Romano Prodi. A member of possible refinements have been proposed by several governments notably those of France and the United Kingdom as well as by many academic economists. Since most of these propos...

The new stability and growth pact : More flexible , less stupid ?