On the desirability of fiscal constraints in a monetary union

The desirability of fiscal constraints in monetary unions depends critically on whether the monetary authority can commit to follow 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.

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Year of publication:	2003
Authors:	Chari, V.V. ; Kehoe, Patrick J.
Institutions:	Federal Reserve Bank of Minneapolis
Subject:	Monetary unions \| Fiscal policy

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Extent:	application/pdf
Series:	Staff Report.
Type of publication:	Book / Working Paper
Language:	English
Notes:	Number 330
Source:	RePEc - Research Papers in Economics

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