The Stability and Growth Pact: Crisis and Reform

Abstract

In 2011 all ECB publications feature a motif taken from the €100 banknote.

Fiscal discipline in EMU? Testing the effectiveness of the Excessive Deficit Procedure

“…Buiter et al, 1993;Bofinger, 2003;Truger, 2013). Others, however, question whether the SGP and its procedures have any actual disciplining power, as deadlines for reducing deficits below 3% of GDP are regularly missed and fines have never been imposed (Schuknecht et al, 2011).…”

Reforming the Architecture of EMU: Ensuring Stability in Europe

“…Whereas EMU Member States submitted Stability Programs to the European Commission in which they outlined how they would reach a (cyclically adjusted) balanced budget, the budgetary adjustments that were implemented in practice were much less ambitious (Beetsma et al, 2009). Large countries, in particular, did not bring down their deficit sufficiently in economic good times (de Haan et al, 2004;Schuknecht et al, 2011). As a consequence, deficits exceeded the 3 per cent threshold once the economic downturn set in 2000/2001.…”

“…For detailed discussions of the SGP, seeAmtenbrink and de Haan (2003;2006),Heipertz and Verdun (2010) andSchuknecht et al (2011).…”

Private Overborrowing under Sovereign Risk

“…Private debt is modeled as in Mendoza (2002) and Bianchi (2011), and the sovereign debt structure follows the tradition of Eaton and Gersovitz (1981) with long-term bonds as in Hatchondo and 1 Morris et al (2006) discuss the reform of the pact in 2005 and distinguish Spain for its compliance. Schuknecht et al (2011) describe the evolution of de cits and sovereign debt in the post-reform period and document Spanish compliance up to the 2008 recession.…”