Maastricht's fiscal rules Willem Buiter, Giancarlo Corsetti and Nouriel Roubini The Maastricht Treaty on Economic and Monetary Union in the EC has specified limits on both government debt and fiscal deficits. Satisfying these criteria is necessary for getting into EMU; once inside, violating these limits will also incur penalties. The fiscal requirements, especially the debt criterion, are much tougher than is required to ensure public-sector solvency. Trying to attain these targets will force the EC initially into substantial deflation and recession. Failure to correct for real growth, inflation and the business cycle makes the nominal deficit a poor basis for any policy or target. Ambiguity about how fiscal targets will in fact be interpreted might provide a way out but cannot today be relied upon to do so. Supranational fiscal rules are sometimes claimed to be justified by externalities in national fiscal policies. We find this justification wanting, both in theory and empirically. A better case might be built on the imposition of external commitments to offset domestic political distortions that systematically induce excessive deficits. Even so, we conclude that the fiscal convergence criteria on balance are harmful, and should be disregarded or applied very loosely to avoid the risk of serious fiscal overkill.