The dog that would never bite? What we can learn from the origins of the Stability and Growth Pact

Abstract

This article analyses the creation of the Stability and Growth Pact. It examines the economic and political factors behind it, including the role of economic ideas, experts, politicians, institutional arrangements in the Maastricht Treaty, domestic politics, and the exceptional position of Germany in the realm of monetary integration. It concludes that a set of commonly held beliefs together with a corresponding power-political constellation explain the creation of the SGP. As these parameters change, they inform our understanding of the current crisis.

Keywords:

• Budgetary discipline
• economic and monetary union
• Germany
• monetary integration
• rules
• Stability and Growth Pact