Fiscal and Monetary Interaction: The Role of Asymmetries of the Stability and Growth Pact in EMU

Matteo Governatori and Sylvester Eijffinger

No 1354, CESifo Working Paper Series from CESifo

Abstract: The paper builds a simplified model describing the economy of a currency union with decentralised national fiscal policy, where the main features characterising the policy-making are similar to those in EMU. National governments choose the size of deficit taking into account the two main rules of the Stability and Growth Pact on public finance. Unlike previous literature the asymmetric working of those rules is explicitly modelled in order to identify its impact on the Nash equilibrium of deficits arising from a game of strategic interaction between fiscal authorities in the union.

Keywords: Stability and Growth Pact; EMU; asymmetric fiscal rules; decentralised fiscal policy (search for similar items in EconPapers)
Date: 2004
New Economics Papers: this item is included in nep-cba, nep-eec, nep-mac, nep-mon and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Working Paper: Fiscal and Monetary Interaction: The Role of Asymmetries of the Stability and Growth Pact in EMU (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_1354

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