Maastricht's Fiscal Rules at Ten: An Assessment

Abstract

The Maastricht Treaty is ten years old. Its fiscal rules played a key role in kickstarting and sustaining the budgetary retrenchment efforts in European Union countries in the run-up to economic and monetary union (EMU). The experience of the Maastricht-induced fiscal consolidation shows that the political economy dimension of the rules is key to their success. It remains to be seen whether the stability and growth pact - which aims to lock EMU members into a permanent fiscal discipline commitment while allowing for flexibility to cushion cyclical fluctuations - will work. In order to succeed in this undertaking, EU governments and institutions have to tackle a number of open issues in the implementation of the pact while recreating the political drive which made Maastricht a success.