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Discretionary policy in a monetary union with sovereign debt.

Abstract:

This paper examines the interactions between multiple national fiscal policymakers and a single monetary policy maker in response to shocks to government debt in some or all of the countries of a monetary union. We assume that national governments respond to excess debt in an optimal manner, but that they do not have access to a commitment technology. This implies that national fiscal policy gradually reduces debt: the lack of a commitment technology precludes a random walk in steady-state de...

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Publication status:
Published
Peer review status:
Not peer reviewed
Version:
Author's Original

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Publisher copy:
10.1016/j.euroecorev.2010.11.007

Authors


Campbell Leith More by this author
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Institution:
University of Oxford
Publisher:
Elsevier B.V. Publisher's website
Journal:
European Economic Review Journal website
Volume:
55
Issue:
1
Publication date:
2011-01-05
DOI:
URN:
uuid:4de00999-74dc-4978-8cb9-8d98fc34ac75
Local pid:
oai:economics.ouls.ox.ac.uk:15008
Language:
English

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