International Advances in Economic Research

, Volume 11, Issue 1, pp 29–38 | Cite as

The Hidden Structural Features of the Fiscal Rule: A European Saga

  • Thierry Warin
Original Article


This paper addresses the question of the reform of the Stability and Growth Pact (SGP). More and more authors and policymakers are bringing to light the negative impacts of the European deficit rule on the countries and their ability to respond asymmetric economic shocks, and some are asking for a redefinition of the pact. If the focus of the SGP is only fiscal, and two of the biggest countries in Europe have failed to abide by the pact since its implementation, it seems clear that the SGP needs at least a re-examination. Yet, on the contrary, if we introduce into the analytical framework the SGP’s impacts on the European Union’s structural policies, the conclusions are far different. Abolishing the SGP could hinder the presently up-to-date convergence prospective. This paper proposes a theoretical analysis of the SGP that emphasizes a new feature of the SGP: a strong incentive to structural reforms.


E61 E62 E63 F02 F42 


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Copyright information

© International Atlantic Economic Society 2005

Authors and Affiliations

  • Thierry Warin
    • 1
  1. 1.Department of Economics, Rohatyn Center for International AffairsMiddlebury CollegeU.S.A

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