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Effectiveness Of Fiscal Policy Coordination Rules In The Monetary Union

Author

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  • Bernadeta Baran

    (Silesian University of Technology, Poland)

Abstract

Stability and Growth Pact is main rule-based framework for the coordination of national fiscal policies in the economic and monetary union (EMU). It was established to safeguard sound public finances, an important requirement for EMU to function properly. Member states had a lot of determination before setting up a monetary union (nominal criteria were a condition to adopt common currency). In the next years, coordination of fiscal policy was not so successful. In many coun-tries, revenues were temporarily boosted by tax-rich activity, while they didn’t restricted their expenditures. In most countries fiscal policy was pro-cyclical (not anti-cyclical) and they didn’t achieve their MTO. Financial crisis has sharpened budgetary problems in member states and showed the weakness of coordination rules.

Suggested Citation

  • Bernadeta Baran, 2012. "Effectiveness Of Fiscal Policy Coordination Rules In The Monetary Union," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 7(3), pages 73-91, September.
    • Handle: RePEc:pes:ierequ:v:7:y:2012:i:3:p:73-91
    DOI: 10.12775/EQUIL.2012.020
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    More about this item

    Keywords

    fiscal rules; deficit; debt; fiscal policy coordination;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • H6 - Public Economics - - National Budget, Deficit, and Debt
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods

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