The paper analyzes some key policy trade-offs involved in the implementation of the Stability and Growth Pact. Greater ""procedural"" flexibility in the Pact''s implementation may improve welfare. Procedural flexibility designates the enforcer''s room to apply judgment on underlying policies and...

It is widely argued that Europe''s unified monetary policy calls for international coordination at the fiscal level. We survey the issues involved in such coordination in the perspective of macroeconomic stabilization. A simple model identifies the circumstances under which coordination may be...

This paper analyzes the decision of a government facing electoral uncertainty to implement structural reforms in the presence of fiscal restraints similar to the Stability and Growth Pact. The model shows that a pact may harm structural reforms, sacrificing future growth for present stability....

The European Monetary Institute has been working with national central banks of the European Union (EU) to prepare instruments for the operation of monetary policy in Stage 3 of European Economic and Monetary Union. Several publications describing the proposed arrangements have been issued. This...