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Should Fiscal Authorities Co‐operate in a Monetary Union with Public Deficit Targets?

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  • MONTSERRAT FERRÉ

Abstract

The Stability and Growth Pact (SGP) aims at reducing the deficit bias and inducing fiscal policy co‐ordination in EMU. This article shows that, under positive (demand or supply) shocks, average deficits and interest rates with fiscal co‐ordination can be higher than without co‐ordination, thus making two of the aims of the SGP incompatible.

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  • Montserrat Ferré, 2005. "Should Fiscal Authorities Co‐operate in a Monetary Union with Public Deficit Targets?," Journal of Common Market Studies, Wiley Blackwell, vol. 43(3), pages 539-550, September.
    • Handle: RePEc:bla:jcmkts:v:43:y:2005:i:3:p:539-550
    DOI: 10.1111/j.0021-9886.2005.00568.x
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    1. Uhlig, H.F.H.V.S., 2002. "One Money, But Many Fiscal Policies in Europe : What are the Consequences?," Discussion Paper 2002-32, Tilburg University, Center for Economic Research.
    2. Uhlig, H.F.H.V.S., 2002. "One Money, But Many Fiscal Policies in Europe : What are the Consequences?," Other publications TiSEM f2cdcc6c-329f-4ae6-915b-2, Tilburg University, School of Economics and Management.
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    1. Ferré, Montserrat, 2008. "Fiscal policy coordination in the EMU," Journal of Policy Modeling, Elsevier, vol. 30(2), pages 221-235.
    2. Onorante, Luca & Pedregal, Diego J. & Pérez, Javier J. & Signorini, Sara, 2010. "The usefulness of infra-annual government cash budgetary data for fiscal forecasting in the euro area," Journal of Policy Modeling, Elsevier, vol. 32(1), pages 98-119, January.
    3. Mark Gertler & Jordi Gali & Richard Clarida, 1999. "The Science of Monetary Policy: A New Keynesian Perspective," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1661-1707, December.
    4. Ferré, Montserrat, 2012. "The effects of uncertainty about countries’ compliance with the Stability and Growth Pact," Journal of Policy Modeling, Elsevier, vol. 34(5), pages 660-674.
    5. Ferré Carracedo, Montserrat, 2006. "Would Fiscal Authorities in the EMU prefer to coordinate?," Working Papers 2072/3687, Universitat Rovira i Virgili, Department of Economics.
    6. Pasquale Foresti, 2018. "Monetary And Fiscal Policies Interaction In Monetary Unions," Journal of Economic Surveys, Wiley Blackwell, vol. 32(1), pages 226-248, February.

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