Stability and Growth Pact of the European Union
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.
KeywordsAutomatic stabilisers Discretionary fiscal policy Excessive deficit procedure Fiscal policy making
- Blinder, A.S. 2004. The case against the case against discretionary fiscal policy, CEPS working paper no. 100. Princeton: Center for Economic Policy Studies.Google Scholar
- Larch, M., P. Van den Noord, and L. Jonung. 2010. The stability and growth pact: Lessons from the great recession, European economy, economic paper no. 429. Brussels: European Commission.Google Scholar
- Uhlig, H. 2003. One money, but many fiscal policies in Europe: What are the consequences? In Monetary and fiscal policies in EMU, interactions and coordination, ed. M. Buti, 29–64. Cambridge: Cambridge University Press.Google Scholar