The Stability Pact - Rationales, Problems, Alternatives

Assar Lindbeck and Dirk Niepelt

No 06.03, Working Papers from Swiss National Bank, Study Center Gerzensee

Abstract: We analyze economic rationales for, and possible alternatives to, the Stability and Growth Pact (SGP). We identify various cross-country spillover effects and domestic policy failures as potential rationales. The two sets of problems suggest different corrective measures, and different measures than those applied in the context of SGP. We contrast the “legalistic” perspective adopted in the Pact with a more incentive-based approach and discuss how the legalistic perspective gives rise to enforcement problems in connection with the implementation of the SGP’s sanctions.

Pages: 18 pages
Date: 2006-06
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Journal Article: The Stability Pact – Rationales, Problems, Alternatives (2006)
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