The Limits of EMU Conditionality: Fiscal Adjustment in Southern Europe

Spyros Blavoukos and George Pagoulatos

Journal of Public Policy, 2008, vol. 28, issue 2, 229-253

Abstract: The EMU fiscal adjustment paths of the four Southern Europe members (Italy, Spain, Greece, and Portugal – SE-4) vary along two dimensions: (a) cross-temporal pre- and post-EMU accession and (b) cross-country. We account for the cross-temporal variation by distinguishing between the ‘hard’ and ‘soft’ EMU conditionality of the pre- and post-accession stage. External constraints in the form of the Maastricht eligibility criteria constituted a significant common ‘push’ factor in the fiscal stabilization process of EMU candidate countries throughout the 1990s. However, their power does not necessarily lead to fiscal sustainability as demonstrated by the post-accession budgetary outlook of the SE-4. We account for the cross-country variation by introducing additional ‘pull’ factors related to the reform content, context and capability, such as unemployment, the level of social concertation, and government effectiveness. Only in cases where such factors were at work did governments engage in structural reforms to consolidate public finances instead of the less controversial path of macroeconomic policy reform.

Date: 2008
References: Add references at CitEc
Citations: View citations in EconPapers (29)

Downloads: (external link)
https://www.cambridge.org/core/product/identifier/ ... type/journal_article link to article abstract page (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cup:jnlpup:v:28:y:2008:i:02:p:229-253_00

Access Statistics for this article

More articles in Journal of Public Policy from Cambridge University Press Cambridge University Press, UPH, Shaftesbury Road, Cambridge CB2 8BS UK.
Bibliographic data for series maintained by Kirk Stebbing ().