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The Political Economy of Fiscal Policy in EMU

Author

Listed:
  • Bob HanckŽ

    (European Institute, London School of Economics and Political Science)

Abstract

This paper treats low inflation in EMU as a collective action problem for Ecofin. The SGP and more broadly the BEPG, operating against a background of the ECB and wage-setting, are the instruments for this. The ECB delegates sanctioning to the member-states while pre-serving the authority to set interest rates. Labour relations systems in different countries pursue disinflationary wage settlements. The BEPG (including the SGP) therefore have to be understood as a critical element in a signalling game between the ECB, Ecofin and the wage-setting systems.

Suggested Citation

  • Bob HanckŽ, 2003. "The Political Economy of Fiscal Policy in EMU," European Political Economy Review, European Political Economy Infrastructure Consortium, vol. 1(Spring), pages 5-14.
    • Handle: RePEc:epe:journl:v:1:y:2003:i:spring:p:5-14
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    File URL: http://www.ugbs.org/weru/eper/vol1/no1/hancke.pdf
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    Cited by:

    1. Campoy Juan Cristóbal & Negrete Juan C., 2010. "Structural Reforms and Budget Deficits in a Monetary Union: A Strategic Approach," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-31, July.

    More about this item

    Keywords

    EMU; fiscal policy; Stability; Growth Pact;
    All these keywords.

    JEL classification:

    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General

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