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Strategic interactions between monetary and fiscal policies: a case study for the European Stability Pact

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  • Jérôme Creel

    (Observatoire français des conjonctures économiques)

Abstract

Our main objective here is to assess the macroeconomic incidence of this peculiar fiscal setting when countries in the Euro area face symmetric shocks. Though these shocks are more easily circumvented than asymmetric shocks – the ECB should be able to stabilise the economy without fiscal policies –, uncoordinated policies with one government following a balanced-budget rule may be very counter-productive for the ECB and for the government with sound public finances. This thus gives a new argument in favour of coordinated monetary and fiscal policies.

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  • Jérôme Creel, 2002. "Strategic interactions between monetary and fiscal policies: a case study for the European Stability Pact," Sciences Po publications info:hdl:2441/3221, Sciences Po.
  • Handle: RePEc:spo:wpmain:info:hdl:2441/3221
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    2. Renate Ohr & André Schmidt, 2004. "Regelgebundene versus diskretionäre Wirtschaftspolitik: das Beispiel des Stabilitäts- und Wachstumspaktes," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 73(3), pages 381-391.

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