Problems of fiscal consolidation and policy coordination

Matti Viren
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Matti Viren: Department of Economics, 20014 University of Turku

No 82, Discussion Papers from Aboa Centre for Economics

Abstract: This paper deals with problems of fiscal consolidation and policy coordination within the European Monetary Union. In the first place, it investigates the potential problems which are caused by cross-country differences in key fiscal parameters and the asymmetric nature of these parameters. In the light of these findings, the pros and cons of policy coordination is evaluated using some alternative multi-country estimates as a point of reference. The empirical results clearly show that policy coordination within the EMU context is difficult because of these large country differences and asymmetries in the transmission mechanisms of fiscal policy. Even so, it is shown that policy coordination clearly pays off.

Keywords: Fiscal policy; policy coordination; government deficit; EMU (search for similar items in EconPapers)
JEL-codes: E61 E63 H62 (search for similar items in EconPapers)
Pages: 27
Date: 2012-12
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:tkk:dpaper:dp82

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