We model a monetary union where fiscal discretion generates excessive debt accumulation in steady state and inefficiently delayed debt adjustment following shocks. By setting a debt target and raising the political cost of deviating from the optimal pace of debt reversal¸ institutional design induces fiscal policymakers to implement unbiased responses to shocks. This is partly achieved by increasing the transparency of the decision-making process. We therefore call for more focused supervision tasks for the European Commission and for parliamentary discussion whenever a disagreement arises between the Commission and a national government.
Muscatelli, V.A., Natale, P., & Tirelli, P. (2012). A simple and flexible alternative to the Stability and Growth Pact deficit ceilings. Is it at hand?. EUROPEAN JOURNAL OF POLITICAL ECONOMY, 28(1), 14-26 [10.1016/j.ejpoleco.2011.07.004].
Citazione: | Muscatelli, V.A., Natale, P., & Tirelli, P. (2012). A simple and flexible alternative to the Stability and Growth Pact deficit ceilings. Is it at hand?. EUROPEAN JOURNAL OF POLITICAL ECONOMY, 28(1), 14-26 [10.1016/j.ejpoleco.2011.07.004]. | |
Tipo: | Articolo in rivista - Articolo scientifico | |
Carattere della pubblicazione: | Scientifica | |
Presenza di un coautore afferente ad Istituzioni straniere: | Si | |
Titolo: | A simple and flexible alternative to the Stability and Growth Pact deficit ceilings. Is it at hand? | |
Autori: | Muscatelli, VA; Natale, P; Tirelli, P | |
Autori: | ||
Data di pubblicazione: | 2012 | |
Lingua: | English | |
Rivista: | EUROPEAN JOURNAL OF POLITICAL ECONOMY | |
Digital Object Identifier (DOI): | http://dx.doi.org/10.1016/j.ejpoleco.2011.07.004 | |
Appare nelle tipologie: | 01 - Articolo su rivista |