The stability and growth pact and Europe's economic recession : rigidity v. flexibility? : an assessment of the debate on selected countries in the Euro area

Abstract

This dissertation addresses the issue on the rigidity and flexibility of the Stability and Growth Pact, in the context of Europe's current economic recession. It first aims at analysing the importance of sustaining economies and having fiscal coordination. Arguments for a flexible approach in order to lessen the impact of a recession, against a rigid one in light of the sovereign debt increase in several Member States will be analysed. It then goes on to assess the developments of the Stability and Growth Pact, together with an overall comparison of its reforms and the current proposal. The last section is a case study on selected countries, which gives a general overview of the Member States' fiscal performance and loyalty towards the rules of Stability and Growth Pact. The concluding chapter gives insight on the current ongoing debate and ultimately answers to whether the Stability and Growth Pact should be rigid or flexible.