Replication data for: Fiscal Governance in the Eurozone: How effectively does the Stability and Growth Pact limit governmental debt in the Euro countries?

The European sovereign debt crisis continues to hold Europe and the World captive. Will the Euro and the fiscal mechanism of the Eurozone survive? And how about the effectiveness of this Stability and Growth Pact (SGP) - do the Euro countries generally fail to comply with the rules of fiscal governance, or, does the Eurozone need a more member-specific fiscal mechanism? In this article, we examine whether and how the SGP influenced the development of governmental debt-making in the Euro countries after the introduction of the Euro. While the SGP could not prevent Euro countries from exceeding their deficits, our synthetic control-analysis reveals that the mechanism effectively reduced overall governmental debt of Euro countries since 1999. In particular donor countries were able to control governmental spending, while many recipient countries -“ including Greece, Portugal and Italy -“ increased governmental debt ever since, resulting in the European sovereign debt crisis. This suggests that while the SGP effectively constrained overall governmental debt-making, a more sophisticated mechanism is required for safeguarding compliance in large recipient countries.