Gaps in the Institutional Structure of the Euro Area

Christopher Sims ()

No 1460, Working Papers from Princeton University, Department of Economics, Center for Economic Policy Studies.

Abstract: The Euro was created at a time when the conventional view was that a central bank could control inflation by controlling the money supply and that fiscal policy?s interaction with monetary policy took the form of attempts to get the central bank to finance government debt. With a sufficiently firm and independent central bank, this view considered that financial markets would force discipline on fiscal policy. By creating a strong, independent central bank at the European level, facing multiple country-level fiscal authorities, the threat of political pressures for inflationary finance would be lower than with individual country central banks.

Keywords: central banking; European union; monetary policy (search for similar items in EconPapers)
JEL-codes: E02 E21 F33 F34 G21 (search for similar items in EconPapers)
Date: 2013-05
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Citations: View citations in EconPapers (2)

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Journal Article: Gaps in the institutional structure of the euro area (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:pri:cepsud:233

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