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Public debt and the future of the EU's stability and growth pact

Brosamle, Klaus, Wenzel, Heinz-Dieter and Lackenbauer, Jorg (2004) Public debt and the future of the EU's stability and growth pact. BERG working paper series on government and growth, 50. BERG, Germany. ISBN 393105246X

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Abstract

Monetary policy and fiscal policy are connected in various ways. This is why the adoption of the Euro as a common European currency has been accompanied by the setup of the European Union’s Stability and Growth Pact, a framework for the coordination of the EU countries’ fiscal policies. In this paper, we provide a short overview of the SGP’s history of origins and the degree to which the EU Member States adhered to it. Further, we analyse what effects public debt and public deficits have and whether, after all, public debt should be limited in one way or the other. Along these lines, the case for budgetary policy coordination in the special context of the Economic and Monetary Union is presented. After looking at the current SGP framework, we shed light on its main shortcomings and present various reform proposals, all of which are critically questioned. Finally, we present a case for a more flexible country-by-country approach to the interpretation of the deficit criterion (based on some simple algebra).

Item Type: Monograph (Working Paper)
Official URL: http://opus.zbw-kiel.de/volltexte/2005/2946/
Additional Information: © 2004 The authors
Library of Congress subject classification: H Social Sciences > HG Finance
Journal of Economic Literature Classification System: E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy Formation, Macroeconomic Aspects of Public Finance, Macroeconomic Policy, and General Outlook > E62 - Fiscal Policy; Public Expenditures, Investment, and Finance; Taxation
D - Microeconomics > D6 - Welfare Economics > D62 - Externalities
E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy Formation, Macroeconomic Aspects of Public Finance, Macroeconomic Policy, and General Outlook > E61 - Policy Objectives; Policy Designs and Consistency; Policy Coordination
H - Public Economics > H8 - Miscellaneous Issues > H87 - International Fiscal Issues; International Public Goods
H - Public Economics > H6 - National Budget, Deficit, and Debt
Sets: Departments > Government
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Identification Number: 50
Date Deposited: 06 Feb 2009 10:11
URL: http://eprints.lse.ac.uk/22571/

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