Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/76637
Authors: 
Muscatelli, Anton
Natale, Piergiovanna
Tirelli, Patrizio
Year of Publication: 
2003
Series/Report no.: 
CESifo Working Paper 1006
Abstract: 
There have been widespread criticisms of EMU fiscal institutions. We consider a simple alternative to the deficit ceilings envisaged in the Stability and Growth Pact. We advocate the adoption of deficit targets. National governments should retain discretion in setting deviations from targets, but these deviations should then be reversed following a predetermined rule. This ensures fiscal discipline and leaves room for stabilisation policies. For the rule to be credible, only small changes are required to current EMU institutions. Our scheme performs well in comparison with existing reform proposals and is consistent with the golden rule of deficit financing.
Document Type: 
Working Paper

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