The SGP: Delicate Balance or Albatross?

  title={The SGP: Delicate Balance or Albatross?},
  author={Matthew Buford Canzoneri and Behzad T. Diba},
The Stability and Growth Pact tried to strike a delicate balance. On the one hand, it imposed constraints on national fiscal policy that were deemed necessary to protect the new European Central Bank (ECB) from outside pressures, especially during the period in which it tried to establish credibility.1 At the same time, the Pact allowed some flexibility for a counter-cyclical fiscal policy. This too was deemed necessary in European Monetary Union (EMU): a stable ECB policy might be expected to… CONTINUE READING