This paper examines, in the context of future EMU membership of the Central and Eastern European countiries (CEECs), the interaction between fiscal policy and the price level in different exchange rate regimes. The theoretical framework is based on the Fiscal Theory of the Price Level (FTPL). The re sults show that a credibly fixed exchange rate is inconsistent with fiscal irresponsibility, while adopting the common currency enables the conduct of ir-responsible policies with the result that a rise in the level of debt by one member country raises the common price level of the whole union.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by EconWPA in its series Macroeconomics with number
0209007.
Find related papers by JEL classification: E00 - Macroeconomics and Monetary Economics - - General - - - General F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions O57 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
This paper has been announced in the following NEP Reports: