Breaking the stability pact: was it predictable?

External research report, Preprint OPEN
Luigi Bonatti; Annalisa Cristini;
  • Subject: Fiscal policy, Policy coordination, Capital formation, Free-riding, Short-termism.
    • jel: jel:H3 | jel:E6 | jel:H7 | jel:O4

We show analytically that the credibility problem which has affected the European Stability Pact originates from the insufficient distinction between two reasons for having binding fiscal constraints. The first reason deals with the governments’ tendency to neglect the ... View more
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