Should Fiscal Authorities Co‐operate in a Monetary Union with Public Deficit Targets?

Montserrat Ferré

Journal of Common Market Studies, 2005, vol. 43, issue 3, 539-550

Abstract: The Stability and Growth Pact (SGP) aims at reducing the deficit bias and inducing fiscal policy co‐ordination in EMU. This article shows that, under positive (demand or supply) shocks, average deficits and interest rates with fiscal co‐ordination can be higher than without co‐ordination, thus making two of the aims of the SGP incompatible.

Date: 2005
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