This paper addresses the question of the efficiency of a fiscal policy rule such as the Stability and Growth Pact of Europe, and compares the latter to alternative rules. The analysis sheds light on where and how fiscal rules should be applied. The model shows that rules may not be useful insofar as governements adjust their behavior to the new rules. A key composite fiscal rule is therefore the effective enforcement of the penalties associated.
FOURÇANS, A. and WARIN, T. (2004). Fiscal Policies Rules in a Monetary Union: Incentives and Moral Hazard. In: Proceedings of the IT&FA 15th International Conference. Berkelety: Berkelety Electronic Press.