Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/110890
Authors: 
De Grauwe, Paul
Foresti, Pasquale
Year of Publication: 
2015
Series/Report no.: 
CESifo Working Paper 5390
Abstract: 
In this paper we suggest that Eurozone countries face a policy trade-off among: 1) a common rule imposing co-movements in fiscal policy; 2) financial stability; and 3) financial integration. We provide empirical evidence documenting the existence of such a trade-off in the period characterized by the financial crisis and by the sovereign debt crisis. Then, we conclude that the intense fiscal rules that have been introduced in the Eurozone after the emergence of the debt crisis reduced the capacity of national governments to deal with asymmetric shocks and became incompatible with either free capital mobility and/or financial stability.
Subjects: 
fiscal policy rules
Eurozone
financial stability
policy objectives
optimal currency areas.
JEL: 
E44
E61
E62
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.