The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Stability and Growth Pact of the European Union

  • Martin Larch
  • Lars Jonung
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_2877

Abstract

While fiscal policy making in the EU is in the hands of national governments, it is to be carried out in accordance with commonly agreed rules: the Stability and Growth Pact (SGP). The SGP originates in the understanding that uncoordinated fiscal policy produces cross-border effects that can harm the functioning of the Economic and Monetary Union. For member states with an excessive deficit, that is, a general government deficit of more than 3% of GDP, the SGP rules are more invasive. Since its inception in 1997, the SGP has undergone a series of amendments aimed at improving fiscal governance in the EU.

Keywords

Automatic stabilisers Discretionary fiscal policy Excessive deficit procedure Fiscal policy making 

JEL Classification

E6 H3 H6 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Martin Larch
    • 1
  • Lars Jonung
    • 1
  1. 1.