Abstract:
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This article studies whether fiscal authorities would prefer to operate like in the current
EMU or to coordinate according to the theoretical literature. The EMU approach will
lead to higher volatility of interest rates, output, inflation and average budget deficits,
but the SGP deficit target will be breached less often. Keywords: fiscal policy coordination, monetary union, Stability and Growth Pact.
JEL No. E61, E63, F33, H0 |