Open Issues On the Implementation of the Stability and Growth Pact

Marco Buti and Bertrand Martinot

National Institute Economic Review, 2000, vol. 174, 92-104

Abstract: Now that the budget deficits in the Euro Area are approaching balance, the Stability and Growth Pact (SGP) looks like a largely non-constraining institutional framework with little impact on national fiscal policies. This article challenges this view and argues that the implementation of the SGP ‘at cruising speed’ is faced with a number of outstanding issues: safeguarding the automatic stabilisers under the SGP; coping with the consequences of the asymmetric nature of the SGP for the co-ordination of macroeconomic policies; and ensuring the long-run sustainability of public finances. It concludes that enlarging the scope and enhancing the credibility of the stability and convergence programmes to become a true instrument of fiscal policy coordination in the Euro Area would be a first step in lifting the uncertainties surrounding the implementation of the SGP.

Date: 2000
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Persistent link: https://EconPapers.repec.org/RePEc:cup:nierev:v:174:y:2000:i::p:92-104_13

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