Working Paper: CEPR ID: DP1688
Authors: Michael J. Artis; Bernhard Winkler
Abstract: The ?Stability Pact? agreed at the Dublin Summit in December 1996 and concluded at the Amsterdam European Council in June 1997 prescribes sanctions for countries that breach the Maastricht deficit ceiling in stage three of European Monetary Union. This paper explores possible motivations for the Stability Pact as an incentive device for fiscal discipline and as a partial substitute for policy coordination and a common ?stability culture?.
Keywords: Monetary Union; Maastricht Treaty; Incentive Contracts; Policy Coordination
JEL Codes: F33; F36; F42; E58; E61
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Stability Pact (E63) | Improved Fiscal Discipline (E62) |
| Stability Pact (E63) | ECB's Ability to Manage Inflation (E52) |
| Stability Pact (E63) | Fiscal Policy Rigidity (E62) |
| Stability Pact (E63) | Adverse Economic Outcomes in Crisis (F65) |