The economic importance of ...scal rules¤
نویسنده
چکیده
The objective of this study is to investigate the e¤ect of the Stability and Growth Pact (SGP) for the cycle, the in‡ation and the sustainability of the public ...nances of the Euro Area. We contribute to the debate by estimating national and Euro-area structural VARS, and by using them in order to evaluate the consequences of the modi...cations to the SGP that have recently been proposed. The SVARs are identi...ed via a mix of short and long run restrictions that are relatively uncontroversial and compatible with most theoretical models of ...scal policy; they also allow simultaneous modeling of ...scal and monetary policy in order to avoid misspeci...cation. The comparison among the di¤erent scenarios highlights the necessity of keeping both the preventive (peer pressure) and the restrictive arm of the pact, because the 3% threshold alone is a necessary but possibly insu¢cient condition to ensure the sustainability of public ...nances.
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