IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

Faut-il contraindre la politique budgétaire en Union monétaire ?. Les enseignements d'une maquette simulée

  • Jérôme Creel

We study the consequences of the Stability and Growth Pact on the implementation of fiscal and monetary policies in Europe. Within a two-country model in a monetary union; two fiscal frameworks are alternatively introduced: governments minimise a loss function and stabilise public debt in the long run; or governments adopt balanced-budget rules. The model is keynesian in the short run but includes wealth effects; hence, it can reproduce the main results of the fiscal theory of the price level in the long run. Outcomes are that governments benefit from tying their hands in the long run if their policies are not coordinated with monetary policy. Even if they are, the common central bank will always prefer that fiscal policies follow balanced-budget rules. Conflicts between fiscal and monetary policies after a shock will likely arise.

If you experience problems downloading a file, check if you have the proper application to view it first. 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.

File URL: http://www.cairn.info/load_pdf.php?ID_ARTICLE=REOF_077_0199
Download Restriction: free

File URL: http://www.cairn.info/revue-de-l-ofce-2001-2-page-199.htm
Download Restriction: free

Article provided by Presses de Sciences-Po in its journal Revue de l'OFCE.

Volume (Year): 77 (2001)
Issue (Month): 2 ()
Pages: 199-249

as
in new window

Handle: RePEc:cai:reofsp:reof_077_0199
Contact details of provider: Web page: http://www.cairn.info/revue-de-l-ofce.htm

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. repec:adr:anecst:y:2000:i:59:p:06 is not listed on IDEAS
  2. Bernanke, Ben S. & Mihov, Ilian, 1997. "What does the Bundesbank target?," European Economic Review, Elsevier, vol. 41(6), pages 1025-1053, June.
  3. M. Buti & D. Franco & H. Ongena, 1997. "Budgetary Policies during Recessions - Retrospective Application of the "Stability and Growth Pact" to the Post-War Period," European Economy - Economic Papers 2008 - 2015 121, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
  4. repec:spo:wpecon:info:hdl:2441/2961 is not listed on IDEAS
  5. Henri Sterdyniak & Eric Bleuze, 1988. "L'interdépendance des économies en change flexible : les apports d'une maquette dynamique," Sciences Po publications info:hdl:2441/5386, Sciences Po.
  6. Clarida, R. & Gertler, M., 1996. "How the Bundesbank Conducts Monetary Policy," Working Papers 96-14, C.V. Starr Center for Applied Economics, New York University.
  7. V. V. Chari & Patrick J. Kehoe, 1998. "On the need for fiscal constraints in a monetary union," Working Papers 589, Federal Reserve Bank of Minneapolis.
  8. Lane, Philip R, 2000. " Asymmetric Shocks and Monetary Policy in a Currency Union," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(4), pages 585-604, December.
  9. Hélène Erkel-Rousse, 1997. "Degré de flexibilité des marchés du travail, ajustement à des chocs asymétriques et union monétaire européenne," Économie et Prévision, Programme National Persée, vol. 128(2), pages 79-100.
  10. Michael Woodford, 1995. "Price Level Determinacy Without Control of a Monetary Aggregate," NBER Working Papers 5204, National Bureau of Economic Research, Inc.
  11. van der Ploeg, Frederick, 1995. "Solvency of counter-cyclical policy rules," Journal of Public Economics, Elsevier, vol. 57(1), pages 45-65, May.
  12. Jérôme Creel & Henri Sterdyniak, 1999. "La politique monétaire sans monnaie," Revue de l'OFCE, Programme National Persée, vol. 70(1), pages 111-153.
  13. Jérôme Creel & Henri Sterdyniak, 2000. "La théorie budgétaire du niveau des prix, un bilan critique," Sciences Po publications 2000-03, Sciences Po.
  14. Michael Artis & Bernhard Winkler, 1998. "The Stability Pact: Safeguarding the Credibility of the European Central Bank," National Institute Economic Review, National Institute of Economic and Social Research, vol. 163(1), pages 87-98, January.
  15. Beetsma, Roel M. W. J. & Lans Bovenberg, A., 1998. "Monetary union without fiscal coordination may discipline policymakers," Journal of International Economics, Elsevier, vol. 45(2), pages 239-258, August.
  16. repec:spo:wpecon:info:hdl:2441/3181 is not listed on IDEAS
  17. Jérôme Creel & Henri Sterdyniak, 1998. "Du bon usage des politiques monétaire et budgétaire en Europe," Post-Print hal-01010410, HAL.
  18. Barro, Robert J. & Gordon, David B., 1983. "Rules, discretion and reputation in a model of monetary policy," Journal of Monetary Economics, Elsevier, vol. 12(1), pages 101-121.
  19. Blake, Andrew P & Weale, Martin, 1998. "Costs of Separating Budgetary Policy from Control of Inflation: A Neglected Aspect of Central Bank Independence," Oxford Economic Papers, Oxford University Press, vol. 50(3), pages 449-67, July.
  20. Fair, Ray C. & Howrey, E. Philip, 1996. "Evaluating alternative monetary policy rules," Journal of Monetary Economics, Elsevier, vol. 38(2), pages 173-193, October.
  21. William Kerr & Robert G. King, 1996. "Limits on interest rate rules in the IS model," Economic Quarterly, Federal Reserve Bank of Richmond, issue Spr, pages 47-75.
  22. Thomas Krichel & Paul Levine & Joseph Pearlman, 1996. "Fiscal and monetary policy in a monetary union: Credible inflation targets or monetized debt?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 132(1), pages 28-54, March.
  23. Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-91, June.
  24. repec:spo:wpecon:info:hdl:2441/2545 is not listed on IDEAS
  25. Paola Veroni, 2001. "Dix ans de politique budgétaire au service de l’euro : l’exemple italien," Sciences Po publications info:hdl:2441/2545, Sciences Po.
  26. Barrell, Ray & Sefton, James, 1997. "Fiscal Policy and the Masstricht Solvency Criteria," The Manchester School of Economic & Social Studies, University of Manchester, vol. 65(3), pages 259-79, June.
  27. Tamim Bayoumi & Barry Eichengreen, 1992. "Shocking Aspects of European Monetary Unification," NBER Working Papers 3949, National Bureau of Economic Research, Inc.
  28. Goodhart, Charles, 1989. "The Conduct of Monetary Policy," Economic Journal, Royal Economic Society, vol. 99(396), pages 293-346, June.
  29. Paola Veroni, 2001. "Dix ans de politique budgétaire au service de l'euro : l'exemple italien," Post-Print hal-01016956, HAL.
  30. Hughes Hallett, A J & Vines, D, 1993. "On the Possible Costs of European Monetary Union," The Manchester School of Economic & Social Studies, University of Manchester, vol. 61(1), pages 35-64, March.
  31. Hughes Hallett, A J & Ma, Yue, 1996. "Changing Partners: The Importance of Coordinating Fiscal and Monetary Policies within a Monetary Union," The Manchester School of Economic & Social Studies, University of Manchester, vol. 64(2), pages 115-34, June.
  32. Henning Bohn, 1998. "The Behavior of U. S. Public Debt and Deficits," The Quarterly Journal of Economics, Oxford University Press, vol. 113(3), pages 949-963.
  33. Maria Demertzis & Andrew Hallett & Ole Rummel, 2000. "Is the European union a natural currency area, or is it held together by policy makers?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 136(4), pages 657-679, December.
  34. Patrick Villieu, 2000. "Elargissement de l'Union monétaire et coordination des politiques budgétaires : un point de vue," Post-Print halshs-00250434, HAL.
  35. Barry Eichengreen & Charles Wyplosz, 1998. "The Stability Pact: more than a minor nuisance?," Economic Policy, CEPR;CES;MSH, vol. 13(26), pages 65-113, 04.
  36. Leith, Campbell & Wren-Lewis, Simon, 2000. "Interactions between Monetary and Fiscal Policy Rules," Economic Journal, Royal Economic Society, vol. 110(462), pages C93-108, March.
  37. Paola Veroni, 2001. "Dix ans de politique budgétaire au service de l'euro : l'exemple italien," Revue de l'OFCE, Presses de Sciences-Po, vol. 76(1), pages 139-178.
  38. Sargent, Thomas J & Wallace, Neil, 1975. ""Rational" Expectations, the Optimal Monetary Instrument, and the Optimal Money Supply Rule," Journal of Political Economy, University of Chicago Press, vol. 83(2), pages 241-54, April.
  39. Barro, Robert J, 1974. "Are Government Bonds Net Wealth?," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1095-1117, Nov.-Dec..
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:cai:reofsp:reof_077_0199. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jean-Baptiste de Vathaire)

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.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 profile, as there may be some citations waiting for confirmation.

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

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.