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of f iscal policy? In this paper, we develop indicators of f iscal credibility that quantify the degree to which policy … good policy track record, contribute to magnifying this effect, thereby improving fiscal credibility. Conversely, empirical … analysis suggests that markets reward credibility with more favorable sovereign financing conditions …
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", albeit of limited size. The value of such services depends on the credibility of the central bank, which can be accumulated …
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We study gains from introducing a common numerical fiscal rule in a "Union" of model economies facing sovereign default risk. We show that among economies in the Union, there is significant disagreement about the common debt limit the Union should implement: the limit preferred by some economies...
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Depending on the preferences of the central bank, countries in a monetary union tend to accumulate less debt. This reduces the need for fiscal criteria such as debt ceilings. In a monetary union with an independent central bank and a sufficiently large number of relatively small members,...
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