SAK economist Peter J. Boldt: Stability at any price?

"When SAK economists have criticised the EMU Stability and Growth Pact over the years, most Finnish economists have regarded us as irresponsible and ignorant," says SAK economist Peter J. Boldt in his article, originally published in February 2003 in the SAK magazine Palkkatyöläinen.

Nowadays, however, it is widely admitted, even at the European Commission, that the Stability Pact is not working. The strict deficit restriction prevents active finance policy precisely when it is most urgently needed, i.e. when growth slows down and unemployment grows. At the same time the European Central Bank - ECB sticks to a tight monetary policy and, despite a slowdown in economic growth, interest rates have not been cut in a year. In the USA, by contrast, the Federal Reserve Bank has radically supported growth and employment by cutting interest rates.

Read the whole article on Trade Union News from Finland.