Reportgreen2004

On the Desirability of Fiscal Constraints in a Monetary Union

39 citations0/0 files storedNational Bureau of Economic Research

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European Monetary and Fiscal Policies Global Financial Crisis and Policies Fiscal Policies and Political Economy

Abstract

The desirability of fiscal constraints in monetary unions depends critically on whether the monetary authority can commit to follow its policies.If it can commit, then debt constraints can only impose costs.If it cannot commit, then fiscal policy has a free-rider problem, and debt constraints may be desirable.This type of free-rider problem is new and arises only because of a time inconsistency problem.* The views expressed herein are those of the authors and not necessarily those of the Federal Reserve Bank of Minneapolis or the Federal Reserve System.

Citations in this library

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References

1993Excessive Deficits: Sense and Nonsense in the Treaty of Maastricht 1999An Analysis of the Stability and Growth Pact 2001Monetary–fiscal policy interactions and commitment versus discretion in a monetary union 2016Federalism, Fiscal Restraints, and European Monetary Union 2000Politics, institutions, and fiscal performance in a federal system: an analysis of the Argentine provinces 1990International Coordination of Fiscal Policy in Limiting Economies 2001Fiscal Federalism in Argentina: Policies, Politics, and Institutional Reform 1991Fiscal deficits, financial integration, and a central bank for Europe

Cited by

2008On Policy Interactions Among Nations: When Do Cooperation and Commitment Matter?2008A Long Term Perspective on the Euro 2006Europe’s hard fix: the Euro area 2004Active monetary policy, passive fiscal policy and the value of public debt: Some further monetarist arithmetic

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