The Critical Mission of the European Stability Growth Pact
Author(s): de Larosiere, Jacques
In November 2003, the French and German fiscal positions shook the norms set out in the Maastricht Treaty and the Stability Growth Pact. Their respective fiscal policies deviated substantially from the budget deficit guidelines set out in the pact. Euro-skeptic commentators, many of whom had earlier denounced the European budgetary rules as arbitrary and even harmful, harshly criticized France and Germany for their policies. The author tries to answer the following questions that have arisen from this debate: Are the budgetary slippages observed in France and Germany serious? Are the fiscal guidelines contained in the Maastricht Treaty and the Stability Growth adequate? Is the European Monetary Union fiscal constraint an exception to the generally accepted policy norms?