Does monetary cooperation or confrontation lead to successful fiscal consolidation?

T. Hellebrandt, Adam Posen and M. Tolle

Financial Stability Review, 2012, issue 16, 131-142

Abstract: Accommodation of fiscal authorities by monetary policy is controversial, as can be seen in current euro area discussions. Some go further and suggest that confrontational enforcement by central banks taking a hard line on adjustment is critical to inducing longer-term fiscal stabilisation. Others suggest that fiscal commitment must come first. This article steps back to look at the historical record of central bank behaviour vis-à-vis fiscal authorities, at least until the current crisis period, and whether cooperative approaches ahead of consolidations have proven as dangerous as some would suggest.

Date: 2012
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Working Paper: Does Monetary Cooperation or Confrontation Lead to Successful Fiscal Consolidation? (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:fisrev:2011:16:12

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