, Volume 101, Issue 1-2, pp 59-84

Public accounting fudges towards EMU: A first empirical survey and some public choice considerations

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Abstract

This paper analyses some one-off measures and other accounting tricks that EU member States have been using to qualify for EMU membership. Moving from empirical evidence to strategic goals, this investigation brings to the fore three crucial issues: the weakness of the methodological rules of the European system of accounts used to assess budgetary convergence in line with the Maastricht Treaty; the open-ended definition of the required budgetary discipline; the shortcomings of the excessive deficit procedure enforced through the Stability Pact. The conclusion urges a return to a strict annual balance requirement for governments' current accounts, to impede strategic adjustments of budgetary positions that are in fact creative accounting operations.