Domestic Budgets in a United Europe: Fiscal Governance from the End of Bretton Woods to EMU

Abstract

Domestic Budgets in a United Europe: Fiscal Governance from the End of Bretton Woods to EMU. By Mark Hallerberg. Ithaca, NY: Cornell University Press, 2004. 258p. $39.95.Why did nearly all European Union member states in the late 1990s succeed in reducing their budget deficits below the necessary 3% threshold in time to join the monetary union, after years of varied success at achieving fiscal discipline? Do the explicit criteria set out by the Treaty of Maastricht and the prospect of participating in the Economic and Monetary Union (EMU) fully explain the fiscal convergence seen in Europe prior to and immediately following monetary union? These are the questions that concern Mark Hallerberg's book. Rather than crediting the incentive of joining the euro zone, Hallerberg focuses on the domestic sources of fiscal reform since 1973. He argues that the Maastricht criteria were important in certain countries, especially in southern Europe. But to understand why virtually all states achieved a sufficiently low budget deficit to participate in monetary union, one must examine the competitiveness of the party system, the functioning of the electoral system, and the ideological coherence of the governing coalitions in individual countries. Domestic political factors offer a more nuanced, and ultimately more convincing, account of fiscal policy in Europe at the end of the twentieth century.