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Interactions between Monetary Policy and Fiscal Rules.

Abstract:

The Fiscal Stability Pact for EMU suggests that constraints on fiscal policy are thought by policy makers to be necessary to ensure that the independent European central bank can control inflation. In this paper we examine the interrelationship between monetary and fiscal policy when both follow simple rules. We identify two stable policy regimes. In the 'active' regime, defined as a monetary policy that seeks to raise real interest rates in response to excess inflation, a self-stabilising fi...

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Authors


Simon Wren-Lewis More by this author
Series:
Discussion Papers
Publication date:
1999
URN:
uuid:60d0c8e0-bdf3-4d48-b7b9-864b5e040fb3
Local pid:
oai:economics.ouls.ox.ac.uk:12111
Language:
English

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