An Alternative Stability Pact for the European Union

Jerome Levy Economics Institute Working Paper No. 296

12 Pages Posted: 12 Jun 2000

See all articles by Philip Arestis

Philip Arestis

University of Cambridge - Department of Land Economy; University of the Basque Country

Kevin McCauley

Copenhagen Business School - Center for Economic and Business Research (CEBR); University of Leeds

Malcolm C. Sawyer

University of Leeds

Date Written: March 2000

Abstract

This paper proposes an alternative stability and growth pact among European Union (EU) governments that would underpin the introduction of a single currency and a "single market" within the EU. The alternative pact embraces a number of new aspects of integration within the EU that are based on a different monetary analysis (different from that of "new monetarism"), new objectives for economic policy (such as employment and growth), and new institutions to reduce various kinds of disparities across the EU. The paper begins by critically examining the Stability and Growth Pact, which accompanied the introduction of the euro in January 1999, but which has not received as much attention in the policy debates on the euro as some other aspects of it. This is followed by a discussion of the institutional underpinnings of the euro, with the argument made that the institutional arrangements have a number of weaknesses. An alternative pact governing monetary and fiscal policy, which contains the promotion of the objective of full employment and that requires the creation of new institutions, is proposed.

JEL Classification: F42

Suggested Citation

Arestis, Philip and McCauley, Kevin and Sawyer, Malcolm C., An Alternative Stability Pact for the European Union (March 2000). Jerome Levy Economics Institute Working Paper No. 296, Available at SSRN: https://ssrn.com/abstract=219170 or http://dx.doi.org/10.2139/ssrn.219170

Philip Arestis (Contact Author)

University of Cambridge - Department of Land Economy ( email )

19 Silver Street
Cambridge, CB3 9EP
United Kingdom

University of the Basque Country

Barrio Sarriena s/n
Leioa, Bizkaia 48940
Spain

Kevin McCauley

Copenhagen Business School - Center for Economic and Business Research (CEBR) ( email )

Porcelaenshaven, Bldg 65
DK-2000 Frederiksberg
Denmark

University of Leeds

Leeds, LS2 9JT
United Kingdom

Malcolm C. Sawyer

University of Leeds ( email )

Leeds LS2 9JT
United Kingdom

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