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Monetary Union and Fiscal Policy Discipline

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  • Wyplosz, Charles

Abstract

The possible emergence of a monetary union in Europe raises a number of new and difficult questions. A central concern is the implication for fiscal policy-making. Fiscal policy assumes an increased importance once the monetary policy instrument is lost. The Delors Report has suggested that there may be a bias towards less discipline. This paper, which focuses on the longer run, is a preliminary attempt at sorting out the issues. It considers how both the incentives and the constraints on fiscal policy may be affected. There is no Delors-type, clear-cut conclusion emerging. The most obvious conclusion is that eventually a monetary union requires some degree of fiscal federalism.

Suggested Citation

  • Wyplosz, Charles, 1991. "Monetary Union and Fiscal Policy Discipline," CEPR Discussion Papers 488, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:488
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    Citations

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    Cited by:

    1. Yannis, Athena, 1996. "Fiscal Federalism and EMU," MPRA Paper 90306, University Library of Munich, Germany.
    2. Joshua Aizenman, 1994. "On The Need For Fiscal Discipline in an Union," NBER Working Papers 4656, National Bureau of Economic Research, Inc.
    3. Békés, Gábor, 1998. "Optimális valutaövezetek, gazdasági integráltság és hasonlatosság: az Európai Unió példája [Optimum currency areas, economic similarity and integration. The European case]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(7), pages 709-737.
    4. Alain DeSerres & René Lalonde, "undated". "Symetrie des chocs touchant les regions canadiennes et choix d'un regime de change," Staff Working Papers 94-9, Bank of Canada.
    5. Pierre-Alain Muet, 1995. "Union monétaire et fédéralisme," Revue de l'OFCE, Programme National Persée, vol. 55(1), pages 151-170.
    6. Jürgen von Hagen & Charles Wyplosz, 2008. "EMU's Decentralized System of Fiscal Policy," European Economy - Economic Papers 2008 - 2015 306, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    7. Richard C. K. Burdekin & Clas Withborg & Thomas D. Willen, 1992. "A Monetary Constitution Case for an Independent European Central Bank," The World Economy, Wiley Blackwell, vol. 15(2), pages 231-249, March.
    8. Paul De Grauwe, 1993. "The Political Economy of Monetary Union in Europe," The World Economy, Wiley Blackwell, vol. 16(6), pages 653-661, November.
    9. Heikki Oksanen, 2016. "Smoothing Asymmetric Shocks vs. Redistribution in the Euro Area: a Simple Proposal for Dealing with Mistrust," CESifo Economic Studies, CESifo Group, vol. 62(2), pages 332-375.
    10. Maurice Obstfeld and Giovanni Peri., 1998. "Regional Nonadjustment and Fiscal Policy: Lessons for EMU," Center for International and Development Economics Research (CIDER) Working Papers C98-096, University of California at Berkeley.
    11. Heikki Oksanen, 2016. "Smoothing Asymmetric Shocks vs. Redistribution in the Euro Area: A Simple Proposal for Dealing with Mistrust in the Euro Area," CESifo Working Paper Series 5817, CESifo.
    12. Meshack Tjirongo, 1995. "Short-term stabilization versus long-term price stability: evaluating Namibia`s membership of the Common Monetary Area," Economics Series Working Papers WPS/1995-18, University of Oxford, Department of Economics.
    13. Francesca Castellani, 2001. "Central Bank Independence and Accountability Under Complete Information," IHEID Working Papers 05-2001, Economics Section, The Graduate Institute of International Studies.
    14. repec:got:cegedp:19 is not listed on IDEAS
    15. Francesco Papadia & Gian Ruggiero, 1999. "Central Bank Independence and Budget Constraints for a Stable Euro," Open Economies Review, Springer, vol. 10(1), pages 63-90, February.
    16. Pavla Bednářová, 2011. "The Fiscal Position of Eurozone Countries under the influence of the global economic crisis [Fiskální pozice zemí eurozóny pod vlivem světové hospodářské krize]," Současná Evropa, Prague University of Economics and Business, vol. 2011(1), pages 17-31.
    17. Fouda Owoundi, Jean-Pierre, 2009. "La convergence des politiques économiques dans la zone franc : où en est-on 15 ans après?," L'Actualité Economique, Société Canadienne de Science Economique, vol. 85(3), pages 319-354, septembre.
    18. Mr. Anthony J. Pellechio & Saqib Rizavi & Phebby Kufa, 2003. "Fiscal Sustainability and Policy Issues in the Eastern Caribbean Currency Union," IMF Working Papers 2003/162, International Monetary Fund.
    19. Renate Ohr & André Schmidt, 2006. "Handelbare Verschuldungsrechte zur Sicherung fiskalischer Stabilität in der Währungsunion?," Departmental Discussion Papers 128, University of Goettingen, Department of Economics.
    20. Beetsma, Roel & Jensen, Henrik, 2003. "Contingent deficit sanctions and moral hazard with a stability pact," Journal of International Economics, Elsevier, vol. 61(1), pages 187-208, October.
    21. Ohr, Renate & Schmidt, André, 2003. "Der Stabilitäts- und Wachstumspakt im Zielkonflikt zwischen fiskalischer Flexibilität und Glaubwürdigkeit: Ein Reformansatz unter Berücksichtigung konstitutionen- und institutionenökonomischer Aspekte," University of Göttingen Working Papers in Economics 19, University of Goettingen, Department of Economics.
    22. Scholten, Ulrich, 1999. "Die Förderung von Wohneigentum," Beiträge zur Finanzwissenschaft, Mohr Siebeck, Tübingen, edition 1, volume 8, number urn:isbn:9783161472343, September.

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