000			01292pab a2200181 454500
008			180718b2004 xxu||||| |||| 00| 0 eng d
100			_aBeetsma, Roel M.W.J.
245			_aReconcilling stability and growth: smart pacts and structural reforms
260			_c2004
300			_ap.431-56.
520			_aThis paper analyzes the decision by a government facing electoral uncertainty to implement structural reforms in the presence of fiscal restraints similar to the Stability and Growth Pact. To the extent that the reform package entails budgetary costs, the model shows that a fiscal pact erodes incentives to carry out structural reforms, sacrificing future growth for present stability. Although the pact effectively addresses the deficit bias resulting from electoral uncertainty, the induced reduction in reforms implies ambiguous welfare effects. We conclude that a "smart" (i.e., welfare-improving) pact should take into account the budgetary effects of structural reforms. Our conclusions are consistent with the actual principles guiding the implementation of the Stability and Growth Pact. - Reproduced.
650			_aStructural adjustment
650			_aEconomic growth
650			_aEconomic reform
700			_aDebrun, Xavier
773			_aIMF Staff Papers
909			_a64262
999			_c64262 _d64262