The Stability and Growth Pact

MICHAEL J. ARTIS European University Institute FABRIZIO BALASSONE Research Department, Bank of Italy RAY BARRELL National Institute for Economic and Social Research ROEL BEETSMA University of Amsterdam and CEPR ANTONIO J. CABRAL Directorate-General for Economic and Financial Affairs, European Commission MATTHEW B. CANZONIERI Georgetown University ALESSANDRA CASELLA Columbia University DECLAN COSTELLO Directorate-General for Economic and Financial Affairs, European Commission THOMAS DALSGAARD Organisation for Economic Co-operation and Development BEHZAD T. DIBA Georgetown University KAREN DURY National Institute for Economic and Social Research JONAS FISCHER Directorate-General for Economic and Financial Affairs, European Commission GABRIELE GIUDICE Directorate-General for Economic and Financial Affairs, European Commission PAUL HIEBERT European Central Bank SIXTEN KORKMAN Council of the European Union ALESSANDRO MISSALE University of Florence JAVIER PÉREZ-GARCIA European Central Bank MASSIMO ROSTAGNO European Central Bank ALAIN DE SERRES Organisation for Economic Co-operation and Development JUERGEN STARK Bundesbank MATTI VIRÉN University of Turku and Bank of Finland

List of Tables List of Figures Acknowledgements Notes on the Contributors Introduction; A.Brunila, M.Buti & D.Franco PART 1: DOES THE EMU NEED FISCAL RULES Does EMU Need a Stability Pact?; R.Beetsma The Stability and Growth Pact: a delicate balance or an albatross?; M.B.Canzoneri & B.T.Diba PART 2: WHERE DOES THE PACT COME FROM? Genesis of a Pact; J.Stark The Stability and Growth Pact: how did we get there?; D.Costello PART 3: HOW DOES THE PACT WORK? Main aspects of the working of the Stability and Growth Pact; A.J.Cabral Fiscal surveillance under the pact: the stability and Convergence Programmes; J.Fischer & G.Giudice PART 4: "CLOSE TO BALANCE OR IN SURPLUS": THE MEDIUM TERM BUDGETARY TARGETS Setting medium-term fiscal targets in EMU; M.J.Artis & M.Buti Estimating prudent budgetary margins for EU countries: a simulated SVAR model approach; T.Dalsgaard & A.de Serres The Stability and Growth Pact, will it ever be reached?; R.Barrell & K.Dury PART 5: FISCAL POLICY CO-ORDINATION UNDER THE PACT Fiscal policy, automatic stabilisers and policy co-ordination in EMU; M.Virén Should fiscal policy co-ordination go beyond the SGP?; S.Korkman PART 6: PUBLIC DEBT UNDER THE STABILITY AND GROWTH PACT Optimal debt under a deficit constraint; M.Rostagno, P.Hiebert & J.Pérez-Garcìa How should the debt be managed? Supporting the Stability Pact; A.Missale PART 7: WERE THERE POSSIBLE ALTERNATIVES? Public investment, the stability Pact and the 'Golden Rule'; F.Balassone & D.Franco Achieving fiscal discipline through tradable deficit permits; A.Casella Glossary References Index