One Money, But Many Fiscal Policies in Europe: What are the Consequences?

39 Pages Posted: 2 May 2002

See all articles by Harald Uhlig

Harald Uhlig

University of Chicago - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: April 2002

Abstract

This Paper outlines some issues regarding the interaction of independent fiscal authorities and one central bank in the European monetary union. It points out the possibilities for coordination failures, ranging everywhere from potentially excessive deficits and free-riding problems to coordination failures in European fiscal or banking crises. As policy conclusions, some suggestions for institutional improvements are made. In particular, the Growth and Stability Pact needs strengthening rather than weakening. Furthermore, a solution for EMU-wide banking regulation needs to be found.

Keywords: EMU, monetary policy, fiscal policy, free-riding, monetary-fiscal policy interaction, banking crisis, fiscal crisis

JEL Classification: E50, E60, H00, H70

Suggested Citation

Uhlig, Harald, One Money, But Many Fiscal Policies in Europe: What are the Consequences? (April 2002). CEPR Discussion Paper No. 3296. Available at SSRN: https://ssrn.com/abstract=310474

Harald Uhlig (Contact Author)

University of Chicago - Department of Economics ( email )

1101 East 58th Street
Chicago, IL 60637
United States

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