scholarly journals Avoiding the Inappropriate: The European Commission and Sanctions under the Stability and Growth Pact

2021 ◽  
Vol 9 (2) ◽  
pp. 163-172
Author(s):  
Martin Sacher
Keyword(s):  
Sovereign Debt ◽  
Debt Crisis ◽  
Process Tracing ◽  
Fiscal Rules ◽  
Economic And Monetary Union ◽  
Stability And Growth Pact ◽  
Sovereign Debt Crisis ◽  
Full Extent ◽  
Growth Pact ◽  
The Stability

Fiscal policy surveillance, including the possibility to impose financial sanctions, has been an important feature of Economic and Monetary Union since its inception. With the reform of fiscal rules in the aftermath of the financial and sovereign debt crisis, coercive provisions have been made stricter and the Commission has formally gained power vis-à-vis the Council. Nevertheless, sanctions under the Stability and Growth Pact for budgetary non-compliance have so far not been imposed. This article asks why the Commission has until now refrained from proposing such sanctions. Using minimalist process-tracing methods, three post-crisis cases in which the imposition of fines was possible, are analysed. Applying an adaptation of normative institutionalism, it is argued that the mechanism entitled “normative-strategic minimum enforcement” provides an explanation of why no sanctions are imposed in the cases studied: Given that the Commission does not perceive punitive action as appropriate, it strategically refrains from applying the enforcement provisions to their full extent.

Fiscal Governance in the Eurozone: How Effectively Does the Stability and Growth Pact Limit Governmental Debt in the Euro Countries?

2014 ◽  
Vol 3 (2) ◽  
pp. 329-351 ◽  
Author(s):  
Sebastian Koehler ◽  
Thomas König
Keyword(s):  
Sovereign Debt ◽  
Debt Crisis ◽  
Government Debt ◽  
Control Analysis ◽  
Stability And Growth Pact ◽  
Synthetic Control ◽  
Sovereign Debt Crisis ◽  
Growth Pact ◽  
European Sovereign Debt Crisis ◽  
The Stability

The European sovereign debt crisis continues to hold Europe and the world captive. Will the euro and the fiscal mechanism of the eurozone survive? And how effective is the Stability and Growth Pact (SGP)? Do the euro countries generally fail to comply with the rules of fiscal governance, or does the eurozone need a more member-specific fiscal mechanism? This article examines whether and how the SGP influenced the development of government debt making in the euro countries after the introduction of the common currency. While the SGP could not prevent euro countries from exceeding their deficits, this study’s synthetic control analysis reveals that the mechanism has effectively reduced the overall government debt of euro countries since 1999. In particular, donor countries were able to control governmental spending, while many recipient countries—including Greece, Portugal and Italy—have increased government debt ever since, resulting in the European sovereign debt crisis. This suggests that while the SGP effectively constrained overall government debt making, a more sophisticated mechanism is required for safeguarding compliance in large recipient countries.

Braucht die EU einen flexibleren Stabilitätspakt?

2004 ◽  
Vol 53 (1) ◽  
Author(s):  
Carsten Hefeker ◽  
Friedrich Heinemann ◽  
Klaus F. Zimmermann
Keyword(s):  
Public Awareness ◽  
Time Lag ◽  
Fiscal Rules ◽  
External Control ◽  
Public Expenditures ◽  
Stability And Growth Pact ◽  
Consolidation Process ◽  
Growth Pact ◽  
Long Run ◽  
The Stability

AbstractIn his contribution Carsten Hefeker points out that most of the official arguments concerning the necessity of the Stability and Growth Pact are not convincing. Nevertheless, a mechanism that credibly avoids excessive debts and deficits is needed in most member states. It would be more useful, however, if such rules would focus on overall debt rather than on deficits. In addition, he advocates to create an external control for such fiscal rules, independent from the Commission and ECOFIN. He concludes that the Pact does not need to become more flexible, but more credible.Friedrich Heinemann states that much of the recent reform debate on the Stability Pact is based on a fundamental misconception: The Pact has not been established as a guiding tool for welfare - maximising politicians, but in order to limit detrimental incentives from fiscal short-sightedness. “Stupid” elements like the three-per-cent deficit ceiling have a clear and beneficial strategic function as boundary within the national budgetary process. Furthermore, simple rules are superior to smart ones in increasing the political costs of high deficits in terms of public awareness. The critique on the pact′s missing flexibility is correct mainly regarding its lose logical link to long-run sustainability. Increasing flexibility in a cyclical sense, however, is not a reform priority. Already today the Pact leaves sufficient leeway for responsible politicians. Instead, the reform focus must be on depoliticising the pact in the sense of limiting Council power in the deficit procedure. More flexibility must not come without depoliticising. He recommends that any reform should only be carried into effect with a significant time lag in order to limit the reputation damage which would be the consequence of any quick institutional response to the Pact′s recent crisis.In his paper Klaus F. Zimmermann argues that the Stability and Growth Pact (SGP) has been subject to criticism ever since its inception. He points out that it overlooks business cycle developments within the framework of the consolidation process; it adopts a too short-term view of the stabilisation target which is also hardly under control of policy-makers; and it deals with policy imperfections in a sub-optimal way. Therefore, a reform of the SGP is urgent. The author suggests that the rules must be handled more flexibly. In his opinion, a mediumterm budgetary target and a focus on public expenditures to tackle the pro-cyclical bias is needed. To restore credibility, the task of supervision should be transferred to an independent European institution.

scholarly journals La acelerada tramitación parlamentaria de la reforma del artículo 135 de la Constitución : especial consideración a la inadmisión de enmiendas. Los límites al derecho de enmienda en la reforma constitucional

2012 ◽  
pp. 165 ◽  
Author(s):  
Piedad García-Escudero Márquez
Keyword(s):  
The State ◽  
Fiscal Rules ◽  
Constitutional Amendment ◽  
Stability And Growth Pact ◽  
Autonomous Communities ◽  
Public Deficit ◽  
Growth Pact ◽  
Effective System ◽  
The Stability ◽  
Regional Governments

Tras el establecimiento de la “restricción europea” al déficit público, la derivada del Tratado de Maastricht y del Pacto de Estabilidad y Crecimiento, las Comunidades Autónomas han estado sujetas a reglas fiscales relativas al déficit y a la deuda, así como a la gestión de sis presupuestos. Esta normativa, sin embargo, no evitó que algunas Comunidades incumplieran los objetivos se estabilidad persupuestaria probablemente porque carecía de un eficaz sistema de sanciones. Este trabajo examina el alcance de la reforma del art. 135 de la Constitución, y especialmente se centra en el margen de maniobra que el nuevo artículo atribuye al Estado para imponer a los gobiernos autonómicos el cumplimiento de los límites de déficit y deuda.After the introduction of the “European restriction” to public deficit, resulting from the Treaty of Maastricht and the Stability and Growth Pact, the Autonomous Communities have been subject to formal fiscal rules with regard to the deficit and the debt, as well as the management of their budgets. However, this regulation did not prevent some Autonomous Communities failed to comply with the budgetary stability objectives, probably because it lacked an effective system of sanctions. This paper examines the scope of the constitutional amendment of article 135, and focuses particularly on the margin of maneuver that new article 135 gives the State to impose the regional governments meet the deficit and debt limits.

scholarly journals After COVID-19: Rethinking Fiscal Rules in Europe

2020 ◽  
Vol 55 (5) ◽  
pp. 276-276
Author(s):  
Keyword(s):  
Sovereign Debt ◽  
Debt Crisis ◽  
Fiscal Rules ◽  
Economic Forecast ◽  
Fiscal Policies ◽  
Sovereign Debt Crisis ◽  
Gdp Growth Rate ◽  
European Sovereign Debt Crisis ◽  
General Government ◽  
Government Deficit

Abstract Following the COVID-19 outbreak in Europe this spring and subsequent measures to contain the pandemic, the European Commission drastically revised its economic and fiscal forecasts. The Summer 2020 Economic Forecast projects that the euro area economy will contract by 8.7% in 2020. The coronavirus crisis is expected to push the general government deficit to about 8.5% of GDP this year. Even in an optimistic V-shaped recovery scenario with a GDP growth rate of 6.1% in 2021 due to the temporary nature of lockdown measures taken in 2020, the headline deficit is expected to decrease to about 3.5% of GDP. Furthermore, both the downturn and the rebound of economic activity are expected to be asymmetric across member states, exposing entrenched divergences. The recent outlook highlights the problem of pro-cyclical revisions of potential output and output gap estimates. Some economists warn that the current fiscal framework may lead to pro-cyclical and thus destabilising fiscal policies, a problem encountered in Southern Europe during the European sovereign debt crisis that has implications for the entire European Union. In order to avoid repeating past mistakes, the debate on how to reform European fiscal policy should be settled before the rules are re-enacted when the coronavirus crisis has passed.

scholarly journals Proces doskonalenia oceny równowagi budżetowej w Unii Gospodarczej i Walutowej

2015 ◽  
Vol 4 (3) ◽  
pp. 13-26
Author(s):  
Juliusz Giżyński ◽  
Ryszard Wierzba
Keyword(s):  
Global Financial Crisis ◽  
Fiscal Rules ◽  
Stability And Growth Pact ◽  
Budget Deficits ◽  
Budget Balance ◽  
Fiscal Discipline ◽  
Political Will ◽  
Growth Pact ◽  
The Stability ◽  
The Global Financial Crisis

Fiscal discipline is one of fundamental requirements of the Economic and MonetaryUnion as specified in the provisions of the Maastricht Treaty (1992) and laterelaborated on in the Stability and Growth Pact (1997). EMU Member States fromthe beginning had serious difficulties in adhering to the fiscal rules, which ledto the first reform of the SGP in 2005 resulting in more flexible fiscal rules. Despitegood economic situation, EMU’s economies still had budget deficits which furtherincreased with the global financial crisis causing government debts to soar overacceptable limits. In due time, two further reforms of SGP were enacted, in 2011and 2013, introducing new indicators and improvements in the assessment of thegovernment budget balance in the euro area. Nevertheless, enforcement of newrules still will depend on EMU governments political will.

23. Economic and Monetary Union

2019 ◽  
pp. 343-357
Author(s):  
Amy Verdun
Keyword(s):  
Exchange Rates ◽  
Monetary Union ◽  
Sovereign Debt ◽  
Global Financial Crisis ◽  
Debt Crisis ◽  
Economic And Monetary Union ◽  
Sovereign Debt Crisis ◽  
To Come ◽  
Set Up ◽  
The Global Financial Crisis

This chapter provides an introduction to economic and monetary union (EMU). It describes the key components of EMU and what happens when countries join. EMU was the result of decades of collaboration and learning, which have been subdivided here into three periods: 1969–91, taking us from the European Council’s first agreement to set up EMU to Maastricht, when the European Council included EMU in the Treaty on European Union (TEU); 1992–2002, from when plans for EMU were being developed to the irrevocable fixing of exchange rates; and 2002 onwards, once EMU had been established, and euro banknotes and coins were circulating in member states. Next, the chapter reviews various theoretical explanations, both economic and political, accounting for why EMU was created and looks at some criticisms of EMU. Finally, the chapter discusses how EMU has fared under the global financial crisis and the sovereign debt crisis. These crises brought to the fore various imperfections in the design of EMU. This section discusses what changes have been made since 2009 to address those flaws and at what we may expect in the years to come.

Taking Stock of the EU Fiscal Rules over the Past 20 Years and Options for Reform

2019 ◽  
Vol 239 (5-6) ◽  
pp. 861-894
Author(s):  
Christophe Kamps ◽  
Nadine Leiner-Killinger
Keyword(s):  
Monetary Policy ◽  
Euro Area ◽  
Maastricht Treaty ◽  
Fiscal Rules ◽  
Stability And Growth Pact ◽  
Public Finances ◽  
The Past ◽  
Growth Pact ◽  
The Stability ◽  
The Eu

Abstract This paper reviews how the European Union’s fiscal rules have developed from the Maastricht Treaty that established the single monetary policy up until today. It shows that the design of these rules did not always follow economic logic but often resulted from political constraints, giving rise to some flaws in the framework from its very beginning. At the same time, the repeated attempts to adjust the fiscal framework to a multitude of circumstances over the past 25 years have made it overly complex and incoherent. Based on a finding that euro area countries’ compliance with the EU fiscal rules has been unsatisfactory, the paper concludes that in its current shape the Stability and Growth Pact is an insufficient disciplining device in good economic times, with the consequence that there are no fiscal buffers, in particular in high-debt countries, such that growth can be supported in economic troughs. Based on this finding, the paper reviews reform options for making the fiscal framework more effective in bringing about sounder public finances and avoiding the pro-cyclicality observed over the past two decades.

scholarly journals Current account imbalances in the EMU: An assessment of official policy responses

2015 ◽  
Vol 62 (2) ◽  
pp. 193-216 ◽  
Author(s):  
Nina Dodig ◽  
Hansjörg Herr
Keyword(s):  
Sovereign Debt ◽  
Structural Adjustment ◽  
Debt Crisis ◽  
Adjustment Process ◽  
Asymmetric Adjustment ◽  
The Great Depression ◽  
Growth Pact ◽  
Macroeconomic Imbalances ◽  
Fiscal Austerity ◽  
The Stability

To handle the sovereign debt crisis in general and macroeconomic imbalances in particular the leading EU institutions and the Troika (European Central Bank, European Commission and International Monetary Fund) adopted two broad approaches: The short-term approach is based on enhancing the Stability and Growth Pact and to impose fiscal austerity on crisis countries. The medium- to long-term strategy consists of internal devaluation via reducing wage costs. Both approaches were combined with structural adjustment programs in the spirit of the Washington Consensus. The Troika?s policy implies an asymmetric adjustment process burdening only crisis countries. It led to the shrinking of demand and output in crisis countries comparable to the Great Depression and brought the European Monetary Union to the edge of deflation. These polices must be judged as mislead increasing the risk of Japanese disease with more than one lost decade.

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