Everywhere in the world, the need for fiscal stimulus has caused a severe deterioration of fiscal balances and raised the unavoidable question of debt sustainability. In the Euro area, the recent initiation of Excessive Deficit procedures by the European Commission against the countries with high deficits has heated this debate. Still, the Euro area needs a credible scheme of budgetary discipline that would allow fiscal authorities to reassure sovereign debt markets and to dissipate the reticence of the ECB in adopting a policy of quantitative easing. That would also facilitate the implementation of fiscal stimulus packages, which could open an exit away from the crisis. Such a scheme should be designed to enforce more discipline, but also more counter-cyclical fiscal policies.

 Keywords : STABILITY AND GROWTH PACT

 JEL :

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