Four Essays and a Funeral: Budgetary Arithmetic Under the Maastricht Treaty
CEPR Discussion Paper Series No. 1755
Posted: 13 Mar 1997
Date Written: December 1996
This paper analyzes four popular themes in the debate about the transition to monetary union: 1) fiscal discipline creating gains in credibility; 2) there being perceptible risk of a bail out for the highly indebted countries; 3) budgets being successfully cut to the required 3% limit in conditions of low growth and low inflation; and 4) the convergence criteria actually being mutually consistent. The usual accounting identities show the first two effects are likely to be small or non-existent, whereas the second two are unlikely to be satisfied.
JEL Classification: F15, E63, H63
Suggested Citation: Suggested Citation