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The Political Economy of Fiscal Policy Co‐ordination in EMU: From Disciplinarian Device to Insurance Arrangement *
Author(s) -
SCHELKLE WALTRAUD
Publication year - 2005
Publication title -
jcms: journal of common market studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.54
H-Index - 90
eISSN - 1468-5965
pISSN - 0021-9886
DOI - 10.1111/j.0021-9886.2005.00560.x
Subject(s) - stability and growth pact , credibility , pact , politics , economics , commission , fiscal policy , ordination , european commission , international economics , macroeconomics , political science , member states , european union , finance , law , machine learning , computer science
The fiscal policy framework of EMU and possible reforms of the Stability and Growth Pact have elicited much debate. The pact has been predicated on a conception of it as a device to discipline Member States. This gives rise to a paradox in which the credibility of policy‐makers it is supposed to enhance is undermined. The article puts forward an alternative conception of policy co‐ordination — collective insurance — designed to enhance the effectiveness of fiscal stabilization. The two approaches lead to different interpretations of how domestic interests affect policy‐making. The insurance approach is shown to support various reform proposals by the Commission.