search query: @author Restoy, F. / total: 4
reference: 3 / 4
| Author: | Restoy, F. |
| Title: | Interest rates and fiscal discipline in monetary unions |
| Journal: | European Economic Review
1996 : NOV, VOL. 40:8, p. 1629-1646 |
| Index terms: | NATIONAL DEBT FOREIGN EXCHANGE MARKET RISK FISCAL POLICY EUROPEAN MONETARY SYSTEM |
| Language: | eng |
| Abstract: | The paper compares market-generated incentives affecting the design of national fiscal policies in a monetary union regime with those corresponding to a fixed-exchange-rate regime of limited credibility. The analysis is based on a simple model that yields equilibrium interest rates in the two regimes as a function of the degree of a government's fiscal and financial discipline. In the paper it is found that market-based mechanisms for financial and fiscal discipline under a monetary union are only more powerful than under the alternative fixed-exchange regime if governments are not heavily indebted. |
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