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Fiscal Policy and the European Stability and Growth Pact: Between macroeconomic necessities and economic- and fiscal-policy requirements

Author

Listed:
  • Willi Leibfritz
  • Rolf Horst Dumke
  • Albert Müller
  • Wolfgang Ochel
  • Michael Reutter
  • Frank Westermann

Abstract

The design of fiscal policy is subject of this study of the countries of the EU and the European Monetary Union commissioned by the Federal Ministry of Finance. In order to avoid inappropriate fiscal policies in individual member states that have a negative effect on the other countries, the member states have agreed to comply with specific rules laid out in the Maastricht Treaty and in the European Stability and Growth Pact. This study presents the possibilities and the limits of fiscal policy in reaching macroeconomic goals, in particular the improvement of the growth and employment conditions. It examines the interaction between fiscal policy and other macro policies, in particular monetary policy and the structural policy. Methodologically the analyses are based on a study of the literature and on own empirical analyses. In addition, a statistical model was developed within the framework of this study in order to examine the effects that past fiscal policy measures in Germany had. The results of this model are also compared with the results of a similar model for the United States.

Suggested Citation

  • Willi Leibfritz & Rolf Horst Dumke & Albert Müller & Wolfgang Ochel & Michael Reutter & Frank Westermann, 2001. "Fiscal Policy and the European Stability and Growth Pact: Between macroeconomic necessities and economic- and fiscal-policy requirements," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 5.
    • Handle: RePEc:ces:ifobei:5
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    Cited by:

    1. Achim Truger, 2013. "Austerity in the euro area: the sad state of economic policy in Germany and the EU," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 10(2), pages 158-174.
    2. Sell, Friedrich L., 2003. "Die Stabilitätsprogramme der EU: Anspruch und Wirklichkeit in den ersten vier Jahren der Europäischen Währungsunion," Working Papers in Economics 2003,2, Bundeswehr University Munich, Economic Research Group.
    3. Tobias Seidel & Frank Westermann, 2004. "Konjunkturelle Auswirkungen des Vorziehens der Steuerreform," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 57(01), pages 25-30, January.

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    More about this item

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • F30 - International Economics - - International Finance - - - General
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General

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