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The effects of uncertainty about countries' compliance with the Stability and Growth Pact
Ferré Carracedo, Montserrat
Universitat Rovira i Virgili. Departament d'Economia; Universitat Rovira i Virgili. Centre de Recerca en Economia Industrial i Economia Pública
The Stability and Growth Pact (SGP) was established to govern discretionary fiscal policy in the European Monetary Union. This article studies the effects created when there is uncertainty about the members’ commitment to respecting the established deficit limits in the SGP. We will show that, even if countries respect the SGP deficit ceiling, the presence of uncertainty about their compliance will bring about higher volatility in key economic variables, which could, in turn, affect unemployment and growth negatively. This finding shows that it is important to reduce uncertainty about the members’ commitment towards the SGP. Keywords: fiscal policy rules, monetary union, Stability and Growth Pact, uncertainty, commitment. JEL No.: E63, F55, H62, H87
339 - Comerç. Relacions econòmiques internacionals. Economia mundial. Màrqueting
Política fiscal
Unió Monetària Europea
Estabilització econòmica
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Working Paper
1988 - 0812
Documents de treball del Departament d'Economia;2011-17

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