IDEAS home Printed from https://ideas.repec.org/p/bep/itfapp/1002.html
   My bibliography  Save this paper

Fiscal Policy Rules In A Monetary Union: Incentives And Moral Hazard

Author

Listed:
  • Andre Fourcans

    (ESSEC Business School)

  • Thierry Warin

    (Minda de Gunzburg CES, Harvard University, Department of Economics, Middlebury College)

Abstract

This paper addresses the question of the efficacy of a fiscal rule such as the Stability and Growth Pact in Europe, and compares the latter to alternative rules. The model challenges the traditional comparative static analyses by proposing a filter for analysing such fiscal rules. The analysis sheds light on where the emphasis should be put on when establishing these rules. As countries are not handcuffed, they integrate the new constraints in their behaviors and may get incentives to infringe the regulation. The model does not conclude that deficit-ceiling rules are not worth implementing but that, whatever the established rules are, a moral hazard issue appears as far as governments adjust their behavior to the new rule. A key component of a fiscal rule is therefore the effective enforcement of the penalties associated. Presented 14th International Conference, San Antonio, Texas, May 2004.

Suggested Citation

  • Andre Fourcans & Thierry Warin, 2004. "Fiscal Policy Rules In A Monetary Union: Incentives And Moral Hazard," International Trade and Finance Association Conference Papers 1002, International Trade and Finance Association.
    • Handle: RePEc:bep:itfapp:1002
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bep:itfapp:1002. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Christopher F. Baum (email available below). General contact details of provider: https://edirc.repec.org/data/itfaeea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.