 Fiscal indiscipline and monetary policy in EMU: Is there any need for a fiscal policy concerned ECB?Pasquale Foresti and Ugo Marani International Journal of Monetary Economics and Finance, 2013, vol. 6, issue 1, 81-95 Abstract: In this article we study the conduct of monetary policy by adopting a monetary union model in which we assume that, departing form the dominant literature, the central bank is directly concerned also about the national fiscal policies. The novelty of our analysis lies in fact that, on the basis of this assumption about the central bank's preferences, we evaluate its stabilisation effort under different scenarios of fiscal policy discipline and coordination in the union. We find that the level of conservativeness of the central bank decreases, while the presence of institutions and tools for the control and the coordination enforcement of fiscal policies are still required. Governments' lack of coordination reduces the fiscal policies stabilisation effort of the central bank, but it increases the monetary authority's reaction to supply shocks. Keywords: European Monetary Union; fiscal stance; asymmetric shocks; monetary policy; EMU; ECB; European Central Bank; fiscal indiscipline; national fiscal policy; monetary union models; modelling; government coordination; stabilisation. (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ids:ijmefi:v:6:y:2013:i:1:p:81-95 Access Statistics for this article More articles in International Journal of Monetary Economics and Finance from Inderscience Enterprises Ltd |
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