Jeffrey Frankel on Europe’s fiscal compact

Will Europe’s Fiscal Compact Work?
By Jeffrey Frankel
Project Syndicate

“At the start of 2013, the eurozone’s ‘fiscal compact’ entered into force, owing to its ratification on December 21 by a 12th country, Finland, a year after German Chancellor Angela Merkel prodded eurozone leaders into agreement. The compact – technically called the Treaty on Stability, Coordination, and Governance in the Economic and Monetary Union – requires member countries to introduce laws limiting their structural government budget deficits to less than 0.5 % of GDP (or less than 1% of GDP if their debt/GDP ratio is ‘significantly below 60%’). So, will this new approach work?”

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