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Economic Policy Coordination in EMU: What Role for the SGP?. CEPS Working Documents No. 202, 1 June 2004

Mortensen, Jorgen. (2004) Economic Policy Coordination in EMU: What Role for the SGP?. CEPS Working Documents No. 202, 1 June 2004. [Working Paper]

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    Abstract

    The implications of the recent institutional crisis in the EU provoked by the failure of the Economic and Financial Affairs Council (ECOFIN) to impose the sanctions on Germany and France provided for in the Stability and Growth Pact are the subject of this Working Document. The paper situates the debate concerning the application of the Stability and Growth Pact (SGP) in a broader evolution of the struggle between two schools of thought concerning macroeconomic policy-making in the EU: the school calling for a strengthening of competences at the EU level (federal economic government) and the school arguing for preserving national competences for budgetary policy even in the face of the transfer of competence for monetary policy to the European Central Bank (ECB). The paper argues that the SGP is an acceptable comprise between the two schools in so far as it establishes rules to be respected without actually transferring competence to the Council in the field of budgetary policy. Consequently, the SGP has not and does not add to the ‘democratic deficit’ within the EU institutional framework. The paper argues, nevertheless, that the excessive deficit procedure (EDP) puts too strong an emphasis on the government budget deficit and suggests that emphasis on the sustainable level of public debt would ensure a stronger basis for assessing whether a given budget deficit may be considered excessive or not.

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    Item Type: Working Paper
    Uncontrolled Keywords: Economic policy coordination.
    Subjects for non-EU documents: EU policies and themes > Policies & related activities > economic and financial affairs > Stability and Growth Pact
    EU policies and themes > Policies & related activities > economic and financial affairs > economic policy
    EU policies and themes > Policies & related activities > economic and financial affairs > EMU/EMS/euro
    Subjects for EU documents: UNSPECIFIED
    EU Series: UNSPECIFIED
    ["eprint_fieldname_eusries" not defined]: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > Centre for European Policy Studies (Brussels) > CEPS Working Documents
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 15 Apr 2007
    Page Range: p. 45
    Last Modified: 15 Feb 2011 17:43
    URI: http://aei.pitt.edu/id/eprint/6633

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