This paper investigates the rationales for fiscal rules in a monetary union, such as the Stability and Growth Pact (SGP), which has been adopted in the European Union (EU). Rationales for rules in fiscal policy have been found linked to the existence of externalities in a monetary union, which...

This paper investigates the rationales for fiscal rules in a monetary union, such as the Stability and Growth Pact (SGP), which has been adopted in the European Union (EU). Rationales for rules in fiscal policy have been found linked to the existence of externalities in a monetary union, which...