"In spite of many claims that the European treaties cannot be reformed, European economic governance has evolved substantially over the last two decades. The process has erected an ever more complex system of rules, deadlines, and commitments conferring more power on the European Commission and other common institutions. This paper analyses the sequence of reforms to the Stability and Growth Pact, focusing on how reliance on shaky theory-laden macroeconomic estimates has played a crucial role in the whole process. The cyclically adjusted (or structural) budget estimate has provided scientific validation to behind-the-scenes political negotiations."

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