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The Political Economy of Fiscal Policy in EMU


  • Bob HanckŽ

    (European Institute, London School of Economics and Political Science)


This paper treats low inflation in EMU as a collective action problem for Ecofin. The SGP and more broadly the BEPG, operating against a background of the ECB and wage-setting, are the instruments for this. The ECB delegates sanctioning to the member-states while pre-serving the authority to set interest rates. Labour relations systems in different countries pursue disinflationary wage settlements. The BEPG (including the SGP) therefore have to be understood as a critical element in a signalling game between the ECB, Ecofin and the wage-setting systems.

Suggested Citation

  • Bob HanckŽ, 2003. "The Political Economy of Fiscal Policy in EMU," European Political Economy Review, European Political Economy Infrastructure Consortium, vol. 1(Spring), pages 5-14.
  • Handle: RePEc:epe:journl:v:1:y:2003:i:spring:p:5-14

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    References listed on IDEAS

    1. Natalie Tocci, 2008. "The EU and Conflict Resolution in Turkey and Georgia: Hindering EU Potential Through the Political Management of Contractual Relations," Journal of Common Market Studies, Wiley Blackwell, vol. 46, pages 875-897, September.
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    Cited by:

    1. Campoy Juan Cristóbal & Negrete Juan C., 2010. "Structural Reforms and Budget Deficits in a Monetary Union: A Strategic Approach," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-31, July.

    More about this item


    EMU; fiscal policy; Stability; Growth Pact;

    JEL classification:

    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General


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