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



Nor is there consensus concerning the numerical size of these spillover effects. So far
econometric work in this field has difficulty in identifying any major effects, suggesting small
and varying effects over time and over countries.25

Although the EMU is a new construction, the evidence on fiscal federalism dealing with the
experience of stabilization policies in federal states like Canada, Switzerland and the United
States may give guidance concerning the design of the SGP. However, very few of our 101
proposals explicitly refer to the record from federal states. There is a surprising lack of
interest in the literature on fiscal federalism among the proposal-makers, probably reflecting
the bias towards theory at the expense of econometric and historical evidence.26

6. Different country experiences: The multiplicity of proposals also reflects the fact that the
authors originate from different countries with different records on stabilization policy,
deficits and debt and at different stages of the business cycle and with different growth rates.
The macroeconomic situation - its past, present and future - of the authors’ home country
thus influences the design of their proposals. There is a clear small/large country division,
where authors from the large countries in the centre of the euro area, France, Germany and
Italy, are more apt to loosen up the Pact than authors from small countries. There is also a
tendency for more proposals to emanate from countries that are not complying with the SGP,
as seen from our empirical work. The cluster analysis brings out these points.

7. Different views on the political constraint - what is politically feasible? The sub-optimality
ofproposals:
Another factor behind the multiplicity is the likelihood that economists differ in
their views on what is politically feasible when designing policy advice. Thus, they choose to
‘optimize’ their recommendations under different constraints. In principle, two economists
may share the same view on what is the first-best solution to a specific problem. However,
they may diverge in opinion when asked to prepare a policy proposal, depending on what they
regard as politically feasible.

Of course, we are not able to derive the first-best solutions held by the authors of the 101
reform proposals. Still, we should be aware that many proposals may be the outcome of ‘sub-

25 See for example Gros and Hobza (2001).

26 Nor are there many references to the literature on international spillovers of domestic policies.

-30-



More intriguing information

1. The name is absent
2. Types of Tax Concessions for Promoting Investment in Free Economic and Trade Areas
3. FDI Implications of Recent European Court of Justice Decision on Corporation Tax Matters
4. The Distribution of Income of Self-employed, Entrepreneurs and Professions as Revealed from Micro Income Tax Statistics in Germany
5. Modelling Transport in an Interregional General Equilibrium Model with Externalities
6. The changing face of Chicago: demographic trends in the 1990s
7. The Formation of Wenzhou Footwear Clusters: How Were the Entry Barriers Overcome?
8. The name is absent
9. Sectoral specialisation in the EU a macroeconomic perspective
10. Has Competition in the Japanese Banking Sector Improved?
11. Improving Business Cycle Forecasts’ Accuracy - What Can We Learn from Past Errors?
12. Parallel and overlapping Human Immunodeficiency Virus, Hepatitis B and C virus Infections among pregnant women in the Federal Capital Territory, Abuja, Nigeria
13. Estimation of marginal abatement costs for undesirable outputs in India's power generation sector: An output distance function approach.
14. The name is absent
15. The name is absent
16. Large Scale Studies in den deutschen Sozialwissenschaften:Stand und Perspektiven. Bericht über einen Workshop der Deutschen Forschungsgemeinschaft
17. The duration of fixed exchange rate regimes
18. Who’s afraid of critical race theory in education? a reply to Mike Cole’s ‘The color-line and the class struggle’
19. How does an infant acquire the ability of joint attention?: A Constructive Approach
20. Gerontocracy in Motion? – European Cross-Country Evidence on the Labor Market Consequences of Population Ageing