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N° 2009-13 |
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| July 2009 |
| New Evidence on the Effectiveness of Europe's Fiscal Restrictions |
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Marcos Poplawski Ribeiro |
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| This paper investigates the past effectiveness of the Maastricht Treaty (MT) and Stability and Growth
Pact (SGP) in disciplining fiscal policy in the Euro zone. We estimate fiscal reaction functions for a panel
of 11 members of the Euro zone including the more recent period of the reformed SGP, and compare them
with fiscal responses from other “industrialized” OECD countries. Our main finding is that in contrast
with the MT, the SGP has been ineffective in tackling excessive deficits in the Euro zone. Moreover,
it has also not induced a countercyclical behavior of the fiscal authorities in the region. These results
evince the need for reforms in Europe’s fiscal restrictions in order to restore their credibility. |
Non-technical summary  |
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Résumé
non-technique
en français |
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| Full text |
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| Fiscal restrictions; panel data; Maastricht Treaty; stability and growth pact |
Keywords |
| C33; E62; E65; H62 |
JEL classification |
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