PACTO DE ESTABILIDADE E CRESCIMENTO NA UNIÃO EUROPÉIA: HÁ INCENTIVOS AO SEU CUMPRIMENTO?

The objective of this paper is to analyze, with the instruments of Game Theory, the incentives that can lead a Member State of the European Union to disregard the Stability and Growth Pact, and thus, to keep an excessive deficit, although aware of the political and financial risk associated with the non-compliance. Some games are analyzed: complete and incomplete information between a country and the European Union and incomplete information between the Union and two countries. This last case brings about an equilibrium that involves formation of reputation. The main conclusion is that the European Union must be strong and demand the fulfillment of the agreed, even if this imposes a high cost. If there were a signaling, as is already happening, that the European Union does not detain enough power to compel their members to adjust their deficits, there probably will be a general and in-cascade non-compliance of the Stability and Growth Pact, what will lead to the downfall of the Economic and Monetary Union.