Normes sociales et politiques européennes

Jean-Paul Fitoussi and Francesco Saraceno

Revue de l'OFCE, 2007, vol. n° 102, issue 3, 283-314

Abstract: This paper reviews the debate on the Stability and Growth Pact. Both empirical and theoretical arguments in favour of the Pact are weak, to warrant a different and plausible (even if extreme) hypothesis: We suggest the view that the Stability Pact is a public social norm, obeyed by countries because of the fear of reputation losses. Our simple model shows that reputation issues may cause the emergence of a stable but inferior equilibrium. Within this framework, the enlargement to more undisciplined countries may worsen the problems posed by the Pact. JEL Classification: D63, D71, E62, E63.

Keywords: Stability Pact; stabilization policies; social norms; reputation; enlargement (search for similar items in EconPapers)
JEL-codes: D63 D71 E62 E63 (search for similar items in EconPapers)
Date: 2007
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Working Paper: Normes sociales et politiques européennes (2007)
Working Paper: Normes sociales et politiques européennes (2007)
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