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The Maastricht Treaty and its protocols contain a number of
convergence criteria that EC member states must satisfy to qualify for
full membership of EMU. In Discussion Paper No. 668, Research Fellow Willem
Buiter reviews and evaluates the economic and political cases for
and against the Maastricht convergence criteria concerning debt and
deficits: that net general government borrowing may not exceed 3% of GDP
and general government gross debt may not exceed 60% of GDP. He finds
these criteria lacking in theoretical or practical foundation and
suggests that they reflect the triumph of central bank (especially
Bundesbank) fiscal-political dogma over economic reasoning and common
sense. Attempts to fulfil these fiscal norms would lead to unnecessary
hardship for several countries and an unnecessarily deflationary fiscal
stance for the Community as a whole. Should We Worry About the Fiscal Numerology of Maastricht? Willem H Buiter Discussion Paper No. 668, June 1992 (IM) |
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