Maastricht criteria versus stability pact

Frank Bohn

No 200506, Working Papers from School of Economics, University College Dublin

Abstract: It is generally believed that fiscal consolidations should occur prior to a country's admission to the European Monetary Union (EMU). This paper argues that the fiscal Maastricht Criteria require badly timed, costly adjustments while not guaranteeing sustained Fiscal restraint. An effective Stability Pact is not only necessary, but should replace the Maastricht Criteria altogether. These conclusions are based on simulations scrutinising the effects both of contractionary fiscal policies and of joining a monetary union. In a case study type analysis it is shown that there is a strong case for both policy changes to happen at the same time.

Keywords: Transition to a monetary union; European Monetary Union; Fiscal policy; Regime change; MULTIMOD; Simulation; Economic and Monetary Union--Membership; Fiscal policy; Monetary unions (search for similar items in EconPapers)
JEL-codes: E63 F42 F47 (search for similar items in EconPapers)
Date: 2005-03
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http://hdl.handle.net/10197/1313 First version, 2005 (application/pdf)

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Journal Article: Maastricht Criteria versus Stability Pact (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:ucn:wpaper:200506

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