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The Political Stability and Growth Pact is Dead: Long Live the Economic Stability and Growth Pact *
Author(s) -
LEBLOND PATRICK
Publication year - 2006
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.1468-5965.2006.00670.x
Subject(s) - pact , stability and growth pact , politics , economics , political stability , bond , state (computer science) , government (linguistics) , international economics , economic policy , member states , political science , finance , european union , law , linguistics , philosophy , algorithm , computer science
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.