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One Money, but Many Fiscal Policies in Europe: What Are the Consequences?

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  • Uhlig, Harald

Abstract

This Paper outlines some issues regarding the interaction of independent fiscal authorities and one central bank in the European monetary union. It points out the possibilities for coordination failures, ranging everywhere from potentially excessive deficits and free-riding problems to coordination failures in European fiscal or banking crises. As policy conclusions, some suggestions for institutional improvements are made. In particular, the Growth and Stability Pact needs strengthening rather than weakening. Furthermore, a solution for EMU-wide banking regulation needs to be found.

Suggested Citation

  • Uhlig, Harald, 2002. "One Money, but Many Fiscal Policies in Europe: What Are the Consequences?," CEPR Discussion Papers 3296, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:3296
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    More about this item

    Keywords

    Emu; Monetary policy; Fiscal policy; Free-riding; Monetary-fiscal policy interaction; Banking crisis; Fiscal crisis;
    All these keywords.

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • H00 - Public Economics - - General - - - General
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General

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