Discussion paper

DP1505 Four Essays and a Funeral: Budgetary Arithmetic under the Maastricht Treaty

This paper analyses four popular themes in the debate about the transition to monetary union: (a) fiscal discipline creating gains in credibility; (b) there being perceptible risk of a bail out for the highly indebted countries; (c) budgets being successfully cut to the required 3% limit in conditions of low growth and low inflation; and (d) 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.

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Citation

Hughes Hallett, A and P McAdam (1996), ‘DP1505 Four Essays and a Funeral: Budgetary Arithmetic under the Maastricht Treaty‘, CEPR Discussion Paper No. 1505. CEPR Press, Paris & London. https://cepr.org/publications/dp1505