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Political economy of the Stability and Growth Pact

Author

Listed:
  • Orsola Costantini

    (Institute for New Economic Thinking, New York, NY, USA)

Abstract

In spite of many claims that the European treaties cannot be reformed, European economic governance has evolved substantially over the last two decades. The process has erected an ever more complex system of rules, deadlines, and commitments conferring more power on the European Commission and other common institutions. This paper analyses the sequence of reforms to the Stability and Growth Pact, focusing on how reliance on shaky theory-laden macroeconomic estimates has played a crucial role in the whole process. The cyclically adjusted (or structural) budget estimate has provided scientific validation to behind-the-scenes political negotiations.

Suggested Citation

  • Orsola Costantini, 2017. "Political economy of the Stability and Growth Pact," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 14(3), pages 333-350, December.
    • Handle: RePEc:elg:ejeepi:v:14:y:2017:i:3:333-350
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    Citations

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    Cited by:

    1. Salvatore D'Acunto & Domenico Suppa, 2021. "L'output gap tra scienza e superstizione. (The output gap between science and superstition)," Moneta e Credito, Economia civile, vol. 74(294), pages 113-135.
    2. Philipp Heimberger, 2020. "Potential Output, EU Fiscal Surveillance and the COVID-19 Shock," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 55(3), pages 167-174, May.
    3. Orsola Costantini, 2020. "The Eurozone as a Trap and a Hostage: Obstacles and Prospects of the Debate on European Fiscal Rules," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 55(5), pages 284-291, September.
    4. Antonio Di Majo, 2020. "Democrazia di Bilancio e Governo delle Finanze pubbliche nella storia del Budgeting pubblico," Working papers 86, Società Italiana di Economia Pubblica.
    5. Servaas Storm, 2019. "Lost in deflation: Why Italy`s woes are a warning to the whole Eurozone," Working Papers Series 94, Institute for New Economic Thinking.

    More about this item

    Keywords

    European Union; eurozone; cyclically adjusted budget; fiscal policy; structural reforms;
    All these keywords.

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H6 - Public Economics - - National Budget, Deficit, and Debt
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt
    • N4 - Economic History - - Government, War, Law, International Relations, and Regulation

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