Peer monitoring and its capacity to deal with negative effects of moral hazard: An explorative case study of the Stability Growth Pact

This report studies whether the peer monitoring arrangement in the Stability Growth Pact (SGP) can decrease negative effects of moral hazard. Theory argues that peer monitoring can reduce moral hazard issues, because peers have the same kind of knowledge and expertise. Peers are therefore less hampered by information asymmetry as apposed to a...