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Problems of fiscal consolidation and policy coordination

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  • Matti Viren

    (Department of Economics, 20014 University of Turku)

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.

Suggested Citation

  • Matti Viren, 2012. "Problems of fiscal consolidation and policy coordination," Discussion Papers 82, Aboa Centre for Economics.
    • Handle: RePEc:tkk:dpaper:dp82
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    Cited by:

    1. Iulia Andreea Bucur & Mircea Muntean, 2014. "An Overview Of Fiscal Consolidation Process In The European Union," Studies and Scientific Researches. Economics Edition, "Vasile Alecsandri" University of Bacau, Faculty of Economic Sciences, issue 20.

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    More about this item

    Keywords

    Fiscal policy; policy coordination; government deficit; EMU;
    All these keywords.

    JEL classification:

    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

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