On the desirability of fiscal constraints in a monetary union
AbstractThe 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.
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Bibliographic InfoPaper provided by Federal Reserve Bank of Minneapolis in its series Staff Report with number 330.
Date of creation: 2003
Date of revision:
Other versions of this item:
- V.V. Chari & Patrick J. Kehoe, 2004. "On the Desirability of Fiscal Constraints in a Monetary Union," NBER Working Papers 10232, National Bureau of Economic Research, Inc.
- F3 - International Economics - - International Finance
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
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