Improving the SGP: Taxes and Delegation rather than Fines

Assar Lindbeck and Dirk Niepelt

No 1389, CESifo Working Paper Series from CESifo

Abstract: We analyze motivations for, and possible alternatives to, the Stability and Growth Pact (SGP). With regard to the former, we identify domestic policy failures and various cross-country spillover effects; with regard to the latter, we contrast an “economic-theory" perspective on optimal corrective measures with the “legalistic" perspective adopted in the SGP. We discuss the advantages of replacing the Pact's rigid rules backed by fines with corrective taxes (as far as spillover effects are concerned) and procedural rules and limited delegation of fiscal powers (as far as domestic policy failures are concerned). This would not only enhance the efficiency of the Pact, but also render it easier to enforce.

Keywords: Stability and Growth Pact; spillover effects; policy failures; Pigouvian taxes; policy delegation (search for similar items in EconPapers)
Date: 2005
New Economics Papers: this item is included in nep-eec, nep-mac and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Improving the SGP: Taxes and Delegation Rather than Fines (2004)
Working Paper: Improving the SGP: Taxes and Delegation rather than Fines (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_1389

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