Is There an Alternative to the Fiscal Compact for Conducting Fiscal Policy in the Euro Area?

This paper suggests an alternative framework for achieving fiscal discipline in the Euro Area. It is argued that national fiscal policies should focus on a long-term objective, such as a public debtto-GDP ratio, and the common monetary policy
should focus on a short-term objective, such as price and output stability. The result is a self-stabilising set-up where the enforcement problem has largely been resolved.