A Simple and Flexible Alternative to the Stability and Growth Pact Deficit Ceilings. Is it at hand?

Vito Muscatelli, Piergiovanna Natale () and Patrizio Tirelli

No 1006, CESifo Working Paper Series from CESifo

Abstract: There have been widespread criticisms of EMU fiscal institutions. We consider a simple alternative to the deficit ceilings envisaged in the Stability and Growth Pact. We advocate the adoption of deficit targets. National governments should retain discretion in setting deviations from targets, but these deviations should then be reversed following a predetermined rule. This ensures fiscal discipline and leaves room for stabilisation policies. For the rule to be credible, only small changes are required to current EMU institutions. Our scheme performs well in comparison with existing reform proposals and is consistent with the golden rule of deficit financing.

Date: 2003
New Economics Papers: this item is included in nep-ifn
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Citations: View citations in EconPapers (7)

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Related works:
Journal Article: A simple and flexible alternative to Stability and Growth Pact deficit ceilings. Is it at hand? (2012)
Working Paper: A simple and flexible alternative to the Stability and Growth Pact deficit ceilings. Is it at hand? (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_1006

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