On the need for fiscal constraints in a monetary union

Research output: Contribution to journalArticle

42 Citations (Scopus)

Abstract

The desirability of fiscal constraints in monetary unions depends critically on whether the monetary authority can commit to following its policies. If it can commit, then debt constraints can only impose costs. If it cannot commit, then fiscal policy has a free-rider problem, and debt constraints may be desirable. This type of free-rider problem is new and arises only because of a time inconsistency problem.

Original languageEnglish (US)
Pages (from-to)2399-2408
Number of pages10
JournalJournal of Monetary Economics
Volume54
Issue number8
DOIs
StatePublished - Nov 1 2007

Fingerprint

Monetary union
Free-rider problem
Debt constraints
Fiscal
Fiscal policy
Time inconsistency
Authority
Costs

Keywords

  • Free riding problem
  • Growth and stability pact
  • International cooperation
  • Time inconsistency

Cite this

On the need for fiscal constraints in a monetary union. / Chari, V. V.; Kehoe, Patrick J.

In: Journal of Monetary Economics, Vol. 54, No. 8, 01.11.2007, p. 2399-2408.

Research output: Contribution to journalArticle

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