Ponencia
Monetary unions under financial shocks: do fiscal rules matter?
Autor/es | Díaz Roldán, Carmen
Montero Soler, Alberto |
Fecha de publicación | 2013 |
Fecha de depósito | 2015-11-11 |
Publicado en |
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ISBN/ISSN | 978-84-695-6945-0 |
Resumen | The recent problems generated by the economic and financial crisis have led to some debate on the role of economic policies. The question is to which extent a specific monetary policy regime would impose a restriction to ... The recent problems generated by the economic and financial crisis have led to some debate on the role of economic policies. The question is to which extent a specific monetary policy regime would impose a restriction to policymakers. In particular, the cost of losing independence in the use of the exchange rate and monetary policy, and the restrictions derived from the fiscal discipline required for supporting monetary agreements. As an example we can think on the expected success of the European Economic and Monetary Union (EMU), related to the benefits of the single currency, the higher degree of integration of financial markets, and also to the sound public finances guaranteed by the set of fiscal rules provided by EMU. When signing the Stability and Growth Pact (SGP), Member States committed themselves to reach a medium-term budgetary position close to balance. The Maastricht Treaty stresses as basic that the Member States of the EMU should avoid excessive deficits, and the reference values for deficit-to-GDP and debt-to GDP ratios have worked in fact as an explicit fiscal rule. But, in practice, the policy orientation of the SGP has not been fully satisfied. This has opened a debate about the utility and effectiveness of fiscal rules in EMU, and on their complementarities with discretionary fiscal policy measures and automatic stabilisers to deal with short-run fluctuations. The aim of this paper is to investigate how to deal with monetary (financial) shocks in a monetary union following fiscal rules. In particular, we will analyse the interaction among those members showing a relatively high level of public debt and those that seem to follow a more strict fiscal discipline. |
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