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Monetary union without fiscal coordination may discipline policymakers
Beetsma,R.M.W.J. Bovenberg,A.L.
Beetsma,R.M.W.J.
Bovenberg,A.L.
Abstract
We show that, with benevolent policymakers and fiscal leadership, monetary unification reduces inflation, taxes and public spending. These disciplining effects of a monetary union, which rise with the number of fiscal players in the union, are likely to raise welfare. Joining an optimally designed monetary union is particularly attractive if fiscal authorities do not care about inflation. Fiscal coordination offsets the disciplining effects of monetary unification. Hence, subsidiarity in fiscal policymaking may enhance welfare.
Description
Pagination: 18
Date
1995
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Unknown Publisher
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59.pdf
Adobe PDF, 109.55 KB
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Keywords
Taxation, Central Banks, Monetary Policy, Monetary Integration, Fiscal Policy, welfare economics, E58 - Central Banks and Their Policies, E61 - Policy Objectives ; Policy Designs and Consistency ; Policy Coordination, E62 - Fiscal Policy ; Modern Monetary Theory, E52 - Monetary Policy, F42 - International Policy Coordination and Transmission, SDG 17 - Partnerships for the Goals
Citation
Beetsma, R M W J & Bovenberg, A L 1995 'Monetary union without fiscal coordination may discipline policymakers' CentER Discussion Paper, vol. 1995-59, Unknown Publisher.