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Fiscal and Monetary Interaction : The Role of Asymmetries of the Stability and Growth Pact in EMU

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  • Eijffinger, S.C.W.

    (Tilburg University, School of Economics and Management)

  • Governatori, M.

    (Tilburg University, School of Economics and Management)

Abstract

The Paper builds a simplified model describing the economy of a currency union with decentralized national fiscal policy, where the main features characterizing the policy-making are similar to those in EMU. National governments choose the size of deficit taking into account the two main rules of the Stability and Growth Pact on public finance. Unlike previous literature the asymmetric working of those rules is explicitly modeled in order to identify its impact on the Nash equilibrium of deficits arising from a game of strategic interaction between fiscal authorities in the union.
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Suggested Citation

  • Eijffinger, S.C.W. & Governatori, M., 2004. "Fiscal and Monetary Interaction : The Role of Asymmetries of the Stability and Growth Pact in EMU," Other publications TiSEM 2abf9c61-f196-4425-badc-6, Tilburg University, School of Economics and Management.
    • Handle: RePEc:tiu:tiutis:2abf9c61-f196-4425-badc-6ca0d06a076b
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    References listed on IDEAS

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    5. Michael J. Artis & Marco Buti, 2000. "‘Close‐to‐Balance or in Surplus’: A Policy‐Maker's Guide to the Implementation of the Stability and Growth Pact," Journal of Common Market Studies, Wiley Blackwell, vol. 38(4), pages 563-591, November.
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    Cited by:

    1. Paolo Biraschi, "undated". "Searching for the optimal EMU fiscal rule:an ex-post analysis of the SGP reform proposals," Working Papers wp2008-7, Department of the Treasury, Ministry of the Economy and of Finance.
    2. Acocella, Nicola & Di Bartolomeo, Giovanni & Tirelli, Patrizio, 2009. "The macroeconomics of social pacts," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 202-213, October.

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    More about this item

    JEL classification:

    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General

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