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Author: Mr.Francesco P. Mongelli Publisher: International Monetary Fund ISBN: 1451951272 Category : Business & Economics Languages : en Pages : 37
Book Description
This paper examines the interest spending and taxation channels through which EMU could affect the public finances. It provides a framework for examining different views on a further narrowing of interest rate differentials. A model of Blanchard and Fischer is amended to analyze the two channels, and empirical evidence on the tax harmonization process is presented. The paper argues that “high-debt” and “high-tax” countries pursuing prudent fiscal policies could benefit the most from EMU: if monetary and widespread fiscal discipline are jointly established, interest rates could decline rapidly, while tax harmonization is likely to be gradual.
Author: Jürgen von Hagen Publisher: ISBN: Category : Euro Languages : en Pages : 36
Book Description
Recoge: 1. Introduction - 2. The fiscal dominance case for the SGP - 3. What do national governments do with their fiscal policies? - 4. Mutual insurance via transfers - 5. Institutional requirements for a transer system - 6. Conclusions reform - 9. Conclusions.
Author: OECD Publisher: OECD Publishing ISBN: 9264172602 Category : Languages : en Pages : 210
Book Description
The launch of the euro reinforces the foundations for unprecedented economic integration encompassing 11 countries, 16 per cent of world GDP and 290 million people. For the first time, the OECD has studied the euro-area as a fully-fledged economic ...
Author: Malcolm Crawford Publisher: Springer ISBN: 134925035X Category : Business & Economics Languages : en Pages : 390
Book Description
Europe is on the road to monetary union (EMU) even if there may be delays and diversions on the way. The focal point of EMU will be its single currency, valid throughout all participating countries, and replacing the national currencies. There will be considerable transitional pain and stress, most of all for member states with very high public debts. For the rest, the road ahead will not be smooth, but should be assisted by easier monetary policy in Germany since 1993. For some countries at least, the pain will be aggravated unnecessarily by design defects in the transitional rules for entry - which there is still time to remedy. The author - no admirer of a federal Europe - describes how EMU could actually work better in a confederal Europe with no federal chief executive and with a relatively weak Parliament. The independent Eurofed would be responsible for managing economic policy on an EC-wide basis, while national governments could use fiscal policies to mitigate local deviations. Weak regions and poor peripheral countries would require more flexible assistance from EC resources, however.
Author: Mr.David K. H. Begg Publisher: International Monetary Fund ISBN: 1451852231 Category : Business & Economics Languages : en Pages : 37
Book Description
Pursuit of price stability may, but need not, exacerbate output fluctuations. This paper discusses the monetary strategy of the European Central Bank, the intermediate targets that this should entail, and implications for accountability, transparency, and reputation. Country-specific shocks will remain but output correlation may not reflect the old pattern of core and peripheral countries. The Stability Pact will force some countries to switch off their automatic stabilizers; others, with fewer fiscal problems, can retain them. Output correlations in EMU may reflect a fiscal core and fiscal periphery. Additional labor market flexibility remains the best solution.
Author: Mr.M. Cangiano Publisher: International Monetary Fund ISBN: 1451975554 Category : Business & Economics Languages : en Pages : 33
Book Description
European Economic and Monetary Union does not envisage creating a central fiscal authority. Monetary and exchange rate policies will be centralized, but fiscal policy will remain a national responsibility, in line with the subsidiarity principle. This paper argues that monetary union will generate pressures for closer economic integration than currently envisaged. Although not a necessity, a more active central role could then be justified on the grounds of allocative efficiency, redistribution, and stabilization. While in the short term enhanced policy coordination may address those pressures satisfactorily, as economic integration proceeds, the case for a central fiscal authority may become stronger.
Author: Luca Lambertini Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
We examine, in a suitable theoretical framework, the relations between monetary and fiscal policies within the European Economic and Monetary Union (EMU). Our stylized setup of EMU includes the following political agents, each endowed with an objective function: (i) A central authority (EC), which aims at maximizing a Social Welfare criterion; (ii) National Fiscal Authorities (FA), which pursue domestic output stabilization, (iii) the European Central Bank (ECB) which has a mandate to stabilize inflation. In this context we ask the following questions: - How would the EC want to direct (or coordinate) the national FA? - Do the EC decisions make control of inflation (the ECB mandate) easier or more difficult? - Do national FA have an incentive to obey to or to deviate from the EC directives? In response to the last question, our main result is that national FA may have an incentive to deviate, even if we exclude time-inconsistent motives in their preference functions, or motives linked to a failure to internalize aggregate demand spillovers. In particular, even in the absence of asymmetric shocks and of aggregate demand spillovers, EC authorities and national governments may have conflicting incentives, depending upon the relative size of disturbances to aggregate demand and supply. When both aggregate demand and supply shocks are positive (resp. negative) and the latter are large enough in absolute terms, then national governments will pursue a more expansionary (resp. contractionary) fiscal policy than it would be desirable from the point of view of social welfare. Our results imply that, if the EC authorities are required to enforce a social welfare function defined over aggregate output and inflation, then it may be necessary to endow the EC with appropriate enforcement devices with respect to the fiscal policy stance of individual member countries. This points to the necessity of having institutions (such as the Stability and Growth Pact, SGP) which help to coordinate and discipline the fiscal stance of member countries. While we do not discuss the specific provisions of the SGP, our conclusions strongly support the idea that the setting of fiscal policies by member countries needs to be disciplined, and in some instances possibly over-ruled, by the EC authorities.
Author: Marco Buti
Author: Marco Buti
Author: Mr.Francesco P. Mongelli
Author: Carlos Vieira
Author: Jürgen von Hagen
Author: OECD
Author: R. Beetsma
Author: Malcolm Crawford
Author: Mr.David K. H. Begg
Author: Mr.M. Cangiano
Author: Luca Lambertini