Patching up the Pact

Willem Buiter and Clemens Grafe

No 3496, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The paper considers the implications for the EU accession candidates of Central and Eastern Europe of the fiscal-financial constraints imposed by the Stability and Growth Pact and the Maastricht Treaty. Our findings apply also to those current EU members whose initial conditions (e.g. infrastructure and progress in state pension reform) or other structural characteristics (e.g. demographic structure, growth potential, Balassa-Samuelson equilibrium real exchange rate appreciation) differ significantly from the EU average. We find the existing criteria to be seriously flawed and propose an alternative rule, the Permanent Balance Rule, based on a strong from of tax smoothing.

Keywords: Tax smoothing; Fiscal sustainability; Stability and growth pact; Golden rule; EU accession (search for similar items in EconPapers)
JEL-codes: E32 E42 E61 E62 E63 F33 F42 H62 H87 (search for similar items in EconPapers)
Date: 2002-08
New Economics Papers: this item is included in nep-ifn, nep-mac and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (36)

Downloads: (external link)
https://cepr.org/publications/DP3496 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Patching up the Pact (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:3496

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP3496

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().