Arbeitspapier

Passive monetary policy and active fiscal policy in a monetary union

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How is the price level determined in a monetary union when the common monetary policy pegs the nominal interest rate? How are the price levels in the member countries determined? We extend the fiscal theory of the price level to the case of a heterogenous monetary union. Price level determinacy follows if fiscal policy at the level of the union as a whole is active. Different combinations of national fiscal policies and a common fiscal policy with "Eurobonds" amount to active fiscal policy for the union, but can have very different implications for the effects of fiscal and monetary policy. We propose how to coordinate the national policies and the common policy for union-wide policy to be active.

Sprache
Englisch
ISBN
978-92-899-5523-2

Erschienen in
Series: ECB Working Paper ; No. 2781

Klassifikation
Wirtschaft
Price Level; Inflation; Deflation
Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
Macroeconomic Issues of Monetary Unions
Thema
fiscal theory of the price level
monetary union
fiscal rules
Eurobonds

Ereignis
Geistige Schöpfung
(wer)
Maćkowiak, Bartosz
Schmidt, Sebastian
Ereignis
Veröffentlichung
(wer)
European Central Bank (ECB)
(wo)
Frankfurt a. M.
(wann)
2023

DOI
doi:10.2866/147368
Handle
Letzte Aktualisierung
10.03.2025, 11:43 MEZ

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Dieses Objekt wird bereitgestellt von:
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Objekttyp

  • Arbeitspapier

Beteiligte

  • Maćkowiak, Bartosz
  • Schmidt, Sebastian
  • European Central Bank (ECB)

Entstanden

  • 2023

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