101 Proposals to reform the Stability and Growth Pact. Why so many? A Survey

areas of reform: 1) more focus on debt and sustainability; 2) country-specific medium-term
targets; 3) taking more economic factors and circumstances into account; and 4) earlier
preventive action. On this basis and after long discussions, the European Council was able to
endorse an agreement on 20 March 2005. This agreement and how it related to the proposals
put forward in the academic debate is further discussed in section 4 below.

3. The empirical analysis

3.1. The set of proposals to be analyzed

As of 20 March 2005, the cut-off date of our survey, we collected a sample of 101 reform
proposals made available in the English language by professional academic and non-academic
economists in and outside Europe.¹² Proposals advanced by policy-makers or non-economists
were not considered because our focus is on the economic profession’s point of view. The
complete list of reform proposals, presented in alphabetic order, is given in Annex 1.

While our selection of working papers, reports, published and unpublished articles may still
not cover the entire literature on the subject, we are convinced that we have identified a
significant and representative part of it.¹³ Of course, more proposals are likely to have
emerged after our cut-off date of March 2005. In particular, the report of the European
Council of 20 March 2005 mapping out the ‘reformed SGP’ triggered a new wave of
assessments and proposals from the economics profession. However, we believe that cutting
the sample off with the arrival of the new Pact gives us a sufficiently interesting collection of
reform proposals to analyze. In short, they cover the history of the ‘old SGP’.

Predictably, many proposals in our collection share some similarities regarding both the
analysis, be it theoretical or empirical, and the policy conclusions. But each proposal also
exhibits some individual distinctive features. To avoid getting bogged down in a tedious
descriptive and qualitative analysis of the mass of proposals, we have characterised each
proposal by a set of eleven variables, mostly nominal and a few cardinal, referring to the

that Italy should be given an ‘early warning’ by the Council. Again, as in 2002, the Council did not take action
(elections were imminent in Italy at that time), and today Italy is of course in an excessive deficit position.
¹² Due to the revisions of the SGP in March 2005, the flow of proposals slowed down significantly.

¹³ We have taken great pains to identify proposals to reform the SGP, searching the web and working paper sites
of various organizations and universities. One limitation is language as we have ruled out non-English
contributions. However, we believe that original proposals of reform made in other languages than English
would have found their way into the English language sooner or later. Thus, we do not regard our focus on
English as a major problem.

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