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The maastricht fiscal criteria: Required but ineffective?

Identifieur interne : 00A208 ( Main/Exploration ); précédent : 00A207; suivant : 00A209

The maastricht fiscal criteria: Required but ineffective?

Auteurs : Robert Holzmann [Allemagne] ; Yves Hervé [Allemagne] ; Roland Demmel [Allemagne]

Source :

RBID : ISTEX:F0097387E6B70BCBB12C9B7716989AB565DE9471

Descripteurs français

English descriptors

Abstract

Abstract: The paper investigates the rationale for, and the effectiveness of the fiscal criteria in the Maastricht treaty against the background of two questions: What are the incentives for an unsound fiscal policy in EMU, and what are the (potential) negative externalities if such a policy were to occur. The paper argues that EMU creates both incentives for a higher fiscal deficit while respecting solvency, and incentives for not rectifying a potentially unsustainable debt level once one is a member. Unsound fiscal policy could trigger important negative extermalities for the other member countries. The paper concludes that the current fiscal provisions of the Maastricht treaty are not sufficiently well defined and the envisaged sanctions not strong enough to enforce a disciplined fiscal stance. This leads to proposals of supplementary measures for surveillance and alternative sanctions. Staying within the framework of the Maastricht treaty, it is strongly suggested that both debt and deficit criteria should be strictly surveyed, but in view of their conceptual and operational deficiencies they should be supplemented by additional indicators. Based on this broader measurement concept, it is proposed to use semi-automatic and market-led sanctions to enforce a disciplined fiscal stance.

Url:
DOI: 10.1007/BF00925007


Affiliations:


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Le document en format XML

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<div type="abstract" xml:lang="en">Abstract: The paper investigates the rationale for, and the effectiveness of the fiscal criteria in the Maastricht treaty against the background of two questions: What are the incentives for an unsound fiscal policy in EMU, and what are the (potential) negative externalities if such a policy were to occur. The paper argues that EMU creates both incentives for a higher fiscal deficit while respecting solvency, and incentives for not rectifying a potentially unsustainable debt level once one is a member. Unsound fiscal policy could trigger important negative extermalities for the other member countries. The paper concludes that the current fiscal provisions of the Maastricht treaty are not sufficiently well defined and the envisaged sanctions not strong enough to enforce a disciplined fiscal stance. This leads to proposals of supplementary measures for surveillance and alternative sanctions. Staying within the framework of the Maastricht treaty, it is strongly suggested that both debt and deficit criteria should be strictly surveyed, but in view of their conceptual and operational deficiencies they should be supplemented by additional indicators. Based on this broader measurement concept, it is proposed to use semi-automatic and market-led sanctions to enforce a disciplined fiscal stance.</div>
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