The author argues that, for any chosen level of the public debt, a consequent social burden arises as the tax-percentage of GNP that can be imposed to service the debt. In this way, there is an infinite number of steady-state paths that are sustainable (and each of them might well be different from one country to another). When considering Europe, the trouble is that the particular Maastricht couple of 3% Deficit/GNP and 60% Debt/GNP was chosen as a singularity, simply because at the time, those parameters characterized the German Economy.
Pasinetti, L. L., The myth ( or folly ) of the 3% deficit/GDP Maastricht ‘parameter’, <<CAMBRIDGE JOURNAL OF ECONOMICS>>, 1998; 1998 (22): 103-116. [doi:10.1093/oxfordjournals.cje.a013701] [http://hdl.handle.net/10807/81120]
The myth ( or folly ) of the 3% deficit/GDP Maastricht ‘parameter’
Pasinetti, Luigi LodovicoPrimo
1998
Abstract
The author argues that, for any chosen level of the public debt, a consequent social burden arises as the tax-percentage of GNP that can be imposed to service the debt. In this way, there is an infinite number of steady-state paths that are sustainable (and each of them might well be different from one country to another). When considering Europe, the trouble is that the particular Maastricht couple of 3% Deficit/GNP and 60% Debt/GNP was chosen as a singularity, simply because at the time, those parameters characterized the German Economy.
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