Between Growth and Stability

Between Growth and Stability

The Demise and Reform of the European Union’s Stability and Growth Pact

Edited by Lelia Simona Talani and Bernard Casey

Combining economic and political science perspectives, this timely and important book describes and analyses the circumstances and events leading to the demise and subsequent reform of the Stability and Growth Pact (SGP).

Conclusions: The Demise and Reform of the SGP and the Future of EMU: Towards the Disruption of the European Integration Process?

Edited by Lelia Simona Talani and Bernard Casey

Subjects: economics and finance, public finance


Leila Simona Talani This book focused on the future of the monetary union in relation to the fate of its fiscal constraints as enshrined in the European Union’s Stability and Growth Pact. The book has offered an interdisciplinary perspective: by its nature the fiscal governance of a single currency area includes interrelated economic and political dimensions. Reacting to national and/or international economic developments, economists have offered a variety of prescriptions designed to enhance fiscal cooperation within the Euro-zone. From an economic point of view, the reforms of the SGP deeply modified its original philosophy, norms and practices. The reforms of the SGP were enacted in the context of deteriorating fiscal conditions; uneven economic growth; vast discrepancies in the scope and extent of structural reforms, especially in the area of labour and pensions; and the changed circumstances of the enlarged EU. They need to be assessed within this context. Because they make greater allowance for the heterogeneity of member states and permit more discretion in the application of the fiscal rule, they enhance credibility, increase flexibility, and elicit greater legitimacy through a clearer economic rationale which leaves more scope for judgement to allow for country-specific circumstances. Hence, the member states must meet the challenge of implementing the new SGP. As Woods argues (Chapter 5), the capacity of the new SGP to be effective depends largely on the ability of the member states of the Eurozone to develop complementary national fiscal frameworks and promote structural reforms. Artis...

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