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dc.contributor.authorPaulus, Philippen_US
dc.date.accessioned2007-01-15en_US
dc.date.accessioned2012-06-20T11:12:19Z-
dc.date.available2012-06-20T11:12:19Z-
dc.date.issued2006en_US
dc.identifier.urihttp://hdl.handle.net/10419/59120-
dc.description.abstractThe continued debate on even the softened Stability and Growth Pact (SGP) highlights that the question of public debt in the European Monetary Union (EMU) needs further scrutiny. Both political economy models for emerging market sovereign debt and exchange rate regimes, as well as models on common pool and debt spillover problems in a monetary union point to an upward drift of public debt for countries joining EMU. In turn, this could lead to the expectation that, the more countries join EMU, the more pressure on an already battered SGP will develop. However, such models and first empirical research tend to focus only on the behaviour of governments - that is, the demand side on the market for government debt. Factors determining the supply side of government debt - i.e. capital markets - are most of the time left out of the analysis. This paper tries to fill this gap by analysing empirically the effects of both public debt demand and supply factors on the budget balances in the EMU candidate countries of Central and Eastern Europe (CEE) as well as in EMU and other OECD countries from 1994 to 2005. The results suggest that, although demand factors seem to have played a more important role than supply factors, some evidence for market conditions limiting new debt is found. More interestingly, despite the SGP disappointment, membership of EMU, as well as the time of the convergence to EMU, so far appears to coincide with more positive budget balances. Since most of the SGP literature assumes that EMU will cause a bias for higher debt due to spillover effects between EMU member countries, this could warrant a different theoretical approach to the impact of monetary unions on government debt.en_US
dc.language.isoengen_US
dc.publisherOtto-Wolff-Inst. für Wirtschaftsordnung Kölnen_US
dc.relation.ispartofseriesDiskussionspapier, Otto-Wolff-Institut für Wirtschaftsordnung 2006,3en_US
dc.subject.jelF33en_US
dc.subject.jelG15en_US
dc.subject.jelH62en_US
dc.subject.jelH63en_US
dc.subject.ddc330en_US
dc.subject.keywordmonetary unionen_US
dc.subject.keywordfiscal stabilityen_US
dc.subject.keywordgovernment debten_US
dc.subject.keywordEMU enlargementen_US
dc.titleThe final blow to the Stability Pact? EMU enlargement and government debten_US
dc.typeWorking Paperen_US
dc.identifier.ppn522539858en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
Appears in Collections:Otto-Wolff-Discussion Papers, Otto-Wolff-Institut für Wirtschaftsordnung

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