Europe's Fiscal Rules Need a Serious Overhaul

Europe’s monetary union is a bold and original undertaking. While most of the key issues that had to be faced have found satisfactory responses, not everything can be right the first time. The Stability and Growth Pact (SGP) stands out as the most serious deficiency. The flaws of the SGP have been described soon after its adoption and it has not taken very long until they have been revealed. By late 2002, the question is not whether the SGP needs to be improved upon, but how.