The EMU Regime and Government Preferences for the Provision of Stabilisation

Impact of Fiscal Policy Conference, p. 303, 2002

34 Pages Posted: 28 Jun 2012

See all articles by Per Eckefeldt

Per Eckefeldt

European Union - European Commission

Jonas Fischer

European Union - Directorate General for Economic and Financial Affairs (DG ECFIN)

Date Written: March 21, 2001

Abstract

In this paper, we attempt at mapping preferences for 'government provision of stabilisation' – which should be understood as action by governments, past and present, that have a stabilising effect on economic activity - at the national level in the EMU on the basis of some indicators of government activity. We find that the EU Member States exhibit differences as regards 'revealed preferences' for government provision of stabilisation, depending both on 'need' and 'taste' factors. In EMU, with price stability as the nominal anchor, monetary policy dominates fiscal policy and architecture of the Stability and Growth Pact secures balanced budgets at the national level. If it is the case that there exists a 'preference gap,' in the sense that the monetary authority is forgiving on unemployment but non-forgiving on inflation and that the reverse is true for the fiscal authorities, this may put stress in the system and result in an inefficient overall regime.

Suggested Citation

Eckefeldt, Per and Fischer, Jonas, The EMU Regime and Government Preferences for the Provision of Stabilisation (March 21, 2001). Impact of Fiscal Policy Conference, p. 303, 2002, Available at SSRN: https://ssrn.com/abstract=2094404

Per Eckefeldt (Contact Author)

European Union - European Commission ( email )

Rue de la Loi 200
Brussels, B-1049
Belgium

Jonas Fischer

European Union - Directorate General for Economic and Financial Affairs (DG ECFIN) ( email )

BU-1 05/190
Brussels, Bruxelles B-1049
Belgium

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