Uncertainty and Fiscal Policy in an Asymmetric Monetary Union

Carsten Hefeker and Blandine Zimmer ()

No 2389, CESifo Working Paper Series from CESifo

Abstract: The paper examines the monetary-fiscal interactions in a monetary union model with uncertainty due to imperfect central bank transparency. We first show that monetary uncertainty disciplines fiscal policymakers and thereby reduces taxes, average inflation and output distortions. However, as more members enter the monetary union, the fiscal disciplining effect of uncertainty is mitigated. As a consequence, monetary union enlargement may lead to a more aggressive fiscal stance in some member countries, depending on their relative economic and political weights, on their government’s spending target, and on the change in the degree of uncertainty that they experience with the enlargement.

Keywords: monetary union; fiscal policy; transparency of monetary policy; asymmetries (search for similar items in EconPapers)
JEL-codes: E58 E63 F36 (search for similar items in EconPapers)
Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo1_wp2389.pdf (application/pdf)

Related works:
Journal Article: Uncertainty and Fiscal Policy in an Asymmetric Monetary Union (2011)
Working Paper: Uncertainty and fiscal policy in an asymmetric monetary union (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_2389

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().