Simple Rules, Fiscal Policy and Wealth Targets in a Monetary Union. An Alternative to the Maastricht Guidelines

M Lossani and Patrizio Tirelli

Scottish Journal of Political Economy, 1994, vol. 41, issue 4, 372-93

Abstract: This paper is concerned with the macroeconomics of asymmetric shocks in a two-country monetary union. Three alternative fiscal rules are considered: (1) no fiscal response; (2) in each country the fiscal stance is expansionary if national wealth is above target and vice versa; and (3) national fiscal policies are centralized and target the union external wealth. The results are assessed from two different angles. The first is the point of view of a global controller that aims to stabilize the union as a whole and reduce national divergences. The second is the perspective of national governments. Copyright 1994 by Scottish Economic Society.

Date: 1994
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Persistent link: https://EconPapers.repec.org/RePEc:bla:scotjp:v:41:y:1994:i:4:p:372-93

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