Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/147716
Authors: 
Menguy, S.
Year of Publication: 
2014
Citation: 
[Journal:] Cogent Economics & Finance [ISSN:] 2332-2039 [Volume:] 2 [Year:] 2014 [Issue:] 1 [Pages:] 2-20
Abstract: 
The aim of our paper is to contribute to the debate on optimal fiscal rules in a monetary union: in terms of global budgetary deficit, of structural budgetary deficit, or of public debt. Indeed, these rules seem to be mixed in the framework of the European Economic and Monetary Union, with the new Fiscal Compact. With the help of a simple macroeconomic model, we show that a goal in terms of public debt is the most appropriate in order to decrease the indebtedness levels, but that it could increase the recessionary risks for the most indebted European countries. Goals in terms of global budgetary deficit or public debt are the most appropriate to limit the budgetary activism and to stabilize fiscal variables in case of demand or supply shocks. However, a goal in terms of structural budgetary deficit is the most appropriate in order to stabilize economic activity levels in case of asymmetric demand or supply shocks.
Subjects: 
monetary union
EMU
fiscal rules
public debt
structural budgetary deficit
global budgetary deficit
JEL: 
E62
F02
F42
Persistent Identifier of the first edition: 
Creative Commons License: 
http://creativecommons.org/licenses/by/3.0/
Document Type: 
Article

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