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Fiscal rules, financial stability and optimal currency areas

Paul De Grauwe and Pasquale Foresti

Economics Letters, 2016, vol. 145, issue C, 278-281

Abstract: In this paper we suggest that Eurozone countries face a policy trade-off between: (1) a common rule imposing co-movements in fiscal policy; (2) financial stability; and (3) financial integration. We provide empirical evidence documenting the existence of such a trade-off in the period ​characterized by the financial crisis and by the sovereign debt crisis.

Keywords: Fiscal policy rules; Eurozone; Financial stability; Policy objectives; Optimal Currency Areas (search for similar items in EconPapers)
JEL-codes: E61 E62 F3 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (7)

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Working Paper: Fiscal rules, financial stability and optimal currency areas (2016) Downloads
Working Paper: Fiscal Rules, Financial Stability and Optimal Currency Areas (2015) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:145:y:2016:i:c:p:278-281

DOI: 10.1016/j.econlet.2016.07.010

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