Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/81197
Authors: 
Lindbeck, Assar
Niepelt, Dirk
Year of Publication: 
2004
Series/Report no.: 
IUI Working Paper 633
Abstract: 
We analyze motivations for, and possible alternatives to, the Stability and Growth Pact (SGP). With regard to the former, we identify domestic policy failures and various cross-country spillover effects; with regard to the latter, we contrast an economic-theory perspective on optimal corrective measures with the legalistic perspective adopted in the SGP. We discuss the advantages of replacing the Pact's rigid rules backed by fines with corrective taxes (as far as spillover effects are concerned) and procedural rules and limited delegation of fiscal powers (as far as domestic policy failures are concerned). This would not only enhance the efficiency of the Pact, but also render it easier to enforce.
Subjects: 
Stability and Growth Pact
Spillover Effects
Policy Failures
Pigouvian Taxes
Policy Delegation
JEL: 
E63
F33
F42
H60
Document Type: 
Working Paper

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