Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/22350
Authors: 
Bofinger, Peter
Mayer, Eric
Year of Publication: 
2004
Series/Report no.: 
Würzburg economic papers 56
Abstract: 
Within this paper we specify a symmetric two country model for the euro area to evaluate monetary and fiscal policy interaction with decentralized fiscal authorities. Obviously this calls for rules which neatly balance the chances and perils. Thereby we show that stringent rules are a prequisitive for a harmonious functioning of a monetary union. Nevertheless given the ability of fiscal policy to effectively stabilize the economic cycle we show that the current rules in reign are of little use. We close the paper by making some suggestions along which the Stability and Growth Pact might be reformed.
Subjects: 
Economic and Monetary Union
Fiscal Policy
Fiscal Rules
Stability and Growth Pact
JEL: 
E63
H6
F31
Document Type: 
Working Paper

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