Interactions between Monetary and Fiscal Policy Rules

Bibliographic Data

ID9714892
AuthorsCampbell Leith (0000-0002-6406-2636, University of Glasgow), Simon Wren‐Lewis (University of Exeter)
Year2000
Volume110
Issue462
PagesC93-C108
Publication date2000-03-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueThe Economic Journal (JOURNAL)
Journal identifiersISSN: 0013-0133 • E-ISSN: 1468-0297
PublisherOxford University Press (OUP) (PUBLISHER)
DOI10.1111/1468-0297.00523
OpenAlexW1965253440
LanguageEN
Citations received13

The Fiscal Stability Pact for EMU implies that constraints on fiscal policy facilitate inflation control. In this paper we identify two stable policy regimes. When monetary policy seeks to raise real interest rates in response to excess inflation, a self-stabilising fiscal policy is required to ensure model stability. A fiscal policy which does not, by itself, ensure fiscal solvency constrains monetary policy to be relatively ‘passive’. However, in simulations we conclude that the central bank does not need to seek, on this account, the degree of debt stabilisation that appears to be implied by the fiscal stability pact

Debt · Economics · European union · Fiscal policy · Fiscal union · Inflation (cosmology · International economics · Macroeconomics · Market liquidity · Member states · Monetary economics · Monetary policy · Pact · Solvency · Stability and Growth Pact · European Monetary and Fiscal Policies · Fiscal Policies and Political Economy · Global Financial Crisis and Policies

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