This paper analyses two features of concern to policy-makers in the countries of the prospective European Monetary Union: the solvency of their government’s finances; and the accuracy of fiscal forecasts. Extending the existing methodology of solvency tests, the paper finds that, with few...

The paper proposes a theoretical analysis illustrating some key policy trade-offs involved in the implementation of a rules-based fiscal framework reminiscent of the Stability and Growth Pact (SGP). The analysis offers some insights on the current debate about the SGP. Specifically, greater...

The purpose of this note is to compare the characteristics of the actual Stability and Growth Pact with that of a European "modified golden rule". The latter would consist in achieving in each EU country a cyclically-adjusted net-of-public-investment balance. The benchmark for comparison is the...

Although the convergence criteria in the Maastricht Treaty led to the creation of the EMU and the euro area has resisted more than some of its critics believed, in the context of major macroeconomic imbalances, the issue of nominal convergence has been the subject of numerous research. This...

Fiscal surveillance was developed as a supranational regulatory process to counteract short-termism and deficit biases in government decision-making. With effective monetary policy to stabilize the economy, restraint on the fiscal discretion of national governments was seen as the key to...

Against the background of the European Commission's reform plans of the Stability and Growth Pact (SGP) this policy brief uses the macroeconometric multi-country model NiGEM to simulate the macroeconomic implications of the most relevant reform options from 2024 onwards. Next to a return to the...