DP1688 The Stability Pact: Safeguarding the Credibility of the European Central Bank

Author(s): Michael J Artis, Bernhard Winkler
Publication Date: August 1997
Keyword(s): Incentive Contracts, Maastricht Treaty, Monetary Union, Policy Coordination
JEL(s): E58, E61, F33, F36, F42
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=1688

The ?Stability Pact? agreed at the Dublin Summit in December 1996 and concluded at the Amsterdam European Council in June 1997 prescribes sanctions for countries that breach the Maastricht deficit ceiling in stage three of European Monetary Union. This paper explores possible motivations for the Stability Pact as an incentive device for fiscal discipline and as a partial substitute for policy coordination and a common ?stability culture?.