Abstract
This paper estimates the effect of the Maastricht treaty’s fiscal criterion on the distribution of EU countries’ general government deficits. Using a treatment effects approach, we find that the 3 percent deficit ceiling acts as a “magnet”, increasing the number of observations around the threshold by 20 percent, while reducing the occurrence of both large government deficits and surpluses. Our results imply that the rule had an effect on deficits even when it was not complied with. Country-specific results under the rank invariance assumption indicate that all countries have seen their fiscal position improve on average because of the deficit rule.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
