The European Stability and Growth Pact (SGP) was amended on 20 March 2005. In the new institutional design, the preventive part is tighter, but the dissuasive part is laxer. Using a game theoretical approach with moral hazard, we find that the new design does not prevent countries from engaging in moral hazard behaviours and countries will thus be less inclined to abide by the SGP.
FOURÇANS, A. et WARIN, T. (2007). Stability and Growth Pact II: Incentives and Moral Hazard. Journal of Economic Policy Reform, pp. 51-62.