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Fiscal Soundness and Monetary Policy

Dr.Florian Buck () and Ludger Schuknecht ()
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Dr.Florian Buck: Federal Ministry of Finance, Wilhelmstr.97, 10117 Berlin

Credit and Capital Markets, 2017, vol. 50, issue 2, 171-187

Abstract: Average gross general government debt-to-GDP ratios in advanced economies have almost reached their highest levels since WWII. Moreover, growing fiscal risks emerge from adverse fiscal-financial linkages and aging societies. Policy-makers should take advantage of the current economic recovery and extraordinary measures by central banks to pursue growth-friendly fiscal consolidation, supported by comprehensive structural and financial sector reforms to improve the growth potential and reduce future fiscal liabilities. These are fundamental elements to enhance macroeconomic resilience and to pave the way for a timely exit from expansionary monetary policy. In case of EMU, a strict implementation of the EU’s fiscal and banking sector governance is essential.

JEL-codes: H3 H6 E6 (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:kuk:journl:v:50:y:2017:i:2:p:171-187