Fiscal Policy Independence in a European Monetary Union

24 Pages Posted: 15 Feb 2006

See all articles by Paul R. Masson

Paul R. Masson

International Monetary Fund (IMF) - Research Department; The Brookings Institution

Jacques Melitz

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST); Centre for Economic Policy Research (CEPR)

Date Written: March 1990

Abstract

The issue of whether constraints should be placed on fiscal policies when moving to European monetary union is examined in the context of the use of fiscal policy for macroeconomic stabilization purposes. Examples of shocks hitting French and German economies are considered: an appreciation of their joint exchange rate against other currencies, an inflation shock, and an oil price increase. Except in the third case, flexible use of fiscal policies in the two countries is likely to give better outcomes than a system with constraints on their use. For the oil price shock, there seems to be a good case for policy coordination, not for ceilings on fiscal deficits.

JEL Classification: 321, 431, 432

Suggested Citation

Masson, Paul R. and Melitz, Jacques, Fiscal Policy Independence in a European Monetary Union (March 1990). Available at SSRN: https://ssrn.com/abstract=884663 or http://dx.doi.org/10.2139/ssrn.884663

Paul R. Masson (Contact Author)

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States

The Brookings Institution ( email )

1775 Massachusetts Ave. NW
Washington, DC 20036-2188
United States
202-797-6278 (Phone)
202-797-2968 (Fax)

Jacques Melitz

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST) ( email )

15 Boulevard Gabriel Peri
Malakoff Cedex, 1 92245
France
+331 41 17 60 46 (Phone)
+331 41 17 60 34 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
104
Abstract Views
956
rank
324,943
PlumX Metrics