France and the Maastricht Criteria: Fiscal Retrenchment and Labour Market Adjustment

  • Stephen Bazen
  • Eric Girardin


A widely held view in France is that the sacrifices made in order to qualify for entry into EMU have been huge. The process had already started in the 1980s with the U-turn in macroeconomic policy in March 1983. A decisive choice was then made in favour of a restrictive macroeconomic stance on both the fiscal and monetary fronts, in order to maintain the franc within the ERM. According to this view, French monetary policy was entirely geared to the franc-mark parity, in order to import credibility from the Bundesbank. This entailed rising and persistent unemployment, a long period with no increase in real wages, and so on. The Maastricht convergence process was the crowning of this painful process, with a historic slashing of the budget deficit, and a killing of inflation.


Fiscal Policy Real Wage Real Interest Rate Public Debt Budget Deficit 
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© Stephen Bazen and Eric Girardin 1999

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  • Stephen Bazen
  • Eric Girardin

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