Stability and Growth Pact and Fiscal Discipline in the Eurozone

Victor Ngai
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Victor Ngai: University of PA

Working Papers from University of Pennsylvania, Wharton School, Weiss Center

Abstract: The Economic and Monetary Union in the European Union relies on fiscal coordination among member states to prevent excessive levels of deficit and debt and to ensure the stability of its single currency. This paper examines the framework of fiscal rules put in place before and after the launch of the euro. I find that enforcement of the budgetary limits in the Stability and Growth Pact was insufficient at the institutional level by the European Commission and by the Economic and Financial Affairs Council (ECOFIN), as well as at the level of the financial markets. In order for fiscal rules across the Eurozone to be successful, proposals for reforming the Pact, including the Six-Pack and the Fiscal Compact Treaty, will need to address enforcement problems on both political and market levels.

JEL-codes: E62 H60 H87 (search for similar items in EconPapers)
Date: 2012-05
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ecl:upafin:12-10

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