EFFECTIVENESS OF FISCAL POLICY COORDINATION RULES IN THE MONETARY UNION

Bernadeta Baran ()
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Bernadeta Baran: Silesian University of Technology, Poland

Equilibrium. Quarterly Journal of Economics and Economic Policy, 2012, vol. 7, issue 3, 73-91

Abstract: Stability and Growth Pact is main rule-based framework for the coordination of national fiscal policies in the economic and monetary union (EMU). It was established to safeguard sound public finances, an important requirement for EMU to function properly. Member states had a lot of determination before setting up a monetary union (nominal criteria were a condition to adopt common currency). In the next years, coordination of fiscal policy was not so successful. In many coun-tries, revenues were temporarily boosted by tax-rich activity, while they didn’t restricted their expenditures. In most countries fiscal policy was pro-cyclical (not anti-cyclical) and they didn’t achieve their MTO. Financial crisis has sharpened budgetary problems in member states and showed the weakness of coordination rules.

Keywords: fiscal rules; deficit; debt; fiscal policy coordination (search for similar items in EconPapers)
JEL-codes: E62 F34 F36 G38 H6 H87 (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:pes:ierequ:v:7:y:2012:i:3:p:73-91

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