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

Author(s): Andrew Hughes Hallett and Peter McAdam

Publication Date: December 1996

Keyword(s): Convergence Criteria, Credibility and Debt and Deficit Ratios

Programme Area(s): International Macroeconomics

Abstract: 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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Bibliographic Reference

Hughes Hallett, A and McAdam, P. 1996. 'Four Essays and a Funeral: Budgetary Arithmetic under the Maastricht Treaty'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=1505