The Stability and Growth Pact Time to Rebuild!
AbstractWithin this paper we specify a symmetric two country model for the euro area to evaluate monetary and fiscal policy interaction with decentralized fiscal authorities. Obviously this calls for rules which neatly balance the chances and perils. Thereby we show that stringent rules are a prequisitive for a harmonious functioning of a monetary union. Nevertheless given the ability of fiscal policy to effectively stabilize the economic cycle we show that the current rules in reign are of little use. We close the paper by making some suggestions along which the Stability and Growth Pact might be reformed. --
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Bibliographic InfoPaper provided by University of Würzburg, Chair for Monetary Policy and International Economics in its series W.E.P. - Würzburg Economic Papers with number 56.
Date of creation: 2004
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Economic and Monetary Union; Fiscal Policy; Fiscal Rules; Stability and Growth Pact;
Find related papers by JEL classification:
- E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
- H6 - Public Economics - - National Budget, Deficit, and Debt
- F31 - International Economics - - International Finance - - - Foreign Exchange
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