The Stability and Growth Pact sets a medium-term target for fiscal policy of a budgetary position 'close to balance or in surplus'. This addition to the deficit rule defined by the Maastricht Treaty has been interpreted as an attempt to reconciliate the objective of sound public finances with...

Balassone, Franco, Momigliano and Monacelli examine the process of fiscal consolidation in Italy during the Nineties. They highlight its success in reversing a trend that could have led to public debt default, and in ensuring the early participation of Italy to monetary union. The authors argue...