Changing partners: the importance of coordinating fiscal and monetary policies within a monetary union
Article Abstract:
A Dornbusch-type model shows the importance of coordination between fiscal policies among member states, and consistency in fiscal and monetary policies in order to create a viable European Monetary Union (EMU). Lack of such coordination has led to the currency crisis of Sep 1992, and the suspension of European monetary system in Aug 1993. The price stability target and the monetary policy guidelines of the European Central Bank can be an effective mechanism to coordinate policy measures among the member nations of EMU. Effects of policy assignments on economic performance are discussed.
Publication Name: The Manchester School of Economic and Social Studies
Subject: Social sciences
ISSN: 0025-2034
Year: 1996
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Financial constraints, aggregate supply, and the monetary transmission mechanism
Article Abstract:
Two macromodels demonstrate two non-neutrality hypotheses for the determination of the conditions of monetary policy effectiveness on real output and financial markets. The first non-neutrality proposition demonstrates the effectiveness of monetary policy despite perfectly anticipated policy actions in a regime of endogenous money. The second non-neutrality proposition demonstrates that monetary policy can affect real output given a regime of exogenous money, if its influence on money varies from its effect on credit.
Publication Name: The Manchester School of Economic and Social Studies
Subject: Social sciences
ISSN: 0025-2034
Year: 1997
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Fiscal policy and the Maastricht solvency criteria
Article Abstract:
European governments increased their debt levels in the 1980s. The criteria set out in the Treaty of Maastricht will lead to a contraction which will increase unemployment while decreasing output. The impact depends partly on monetary policy. Output may be reduced if the Maastricht criteria are relaxed and government spending does not increase. The exchange rate is likely to appreciate due to a rise in interest rates imposed by the Bundesbank.
Publication Name: The Manchester School of Economic and Social Studies
Subject: Social sciences
ISSN: 0025-2034
Year: 1997
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