A previous version of this article was presented at the international conference on the Political and Economic Consequences of European Monetary Integration held at the University of Victoria, Canada, 18–19 August 2005. The author thanks David Howarth, Arne Niemann, Francesco Passarelli, Paul Schure and two anonymous reviewers for their useful comments on earlier versions of this article. Special thanks also go to Jonathan Beauchesne for his last-minute research assistance.
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The Political Stability and Growth Pact is Dead: Long Live the Economic Stability and Growth Pact†
Article first published online: 6 DEC 2006
DOI: 10.1111/j.1468-5965.2006.00670.x
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How to Cite
LEBLOND, P. (2006), The Political Stability and Growth Pact is Dead: Long Live the Economic Stability and Growth Pact. JCMS: Journal of Common Market Studies, 44: 969–990. doi: 10.1111/j.1468-5965.2006.00670.x
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Publication History
- Issue published online: 6 DEC 2006
- Article first published online: 6 DEC 2006
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Abstract
Euro area countries suspended the excessive deficit procedure (EDP) of the Stability and Growth Pact in November 2003. Surprisingly perhaps, long-term European government bond-holders did not react: yields barely moved. Owing to its political nature, the EDP does not matter for investors. What matters is the implicit economic pact that investors have made with Member State governments.