Exchange rate regimes and fiscal discipline in OECD countries

Arbeitspapier

Since the start of EMU national fiscal policy in the Eurozone can be conducted almost without paying any attention to consequences for the exchange rate. This might lower fiscal discipline. In order to shed light on the empirical relevance of this consideration, the impact of the exchange rate regime and a number of other variables on primary deficits is analysed in a panel estimation for 20 OECD countries from 1970 onwards. The conclusion is that the exchange rate regime as such is not relevant for the fiscal balance – a result backing an optimistic view on fiscal discipline under EMU. On the other hand, however, there is the result that a high degree of openness has a deficit reducing impact. This is a worrying result in the EMU context since the single currency reduces openness. The study underlines the efficacy of the Maastricht criteria. The criteria and not economic necessity have dictated the consolidation in the EU during the 90s.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ZEW Discussion Papers ; No. 99-04

Classification and Topics

• Classification: Wirtschaft ; National Budget, Deficit, and Debt: General ; Policy Objectives; Policy Designs and Consistency; Policy Coordination ; Foreign Exchange
• Subject: EMU ; Exchange Rate Regime ; Fiscal Discipline ; Wechselkurssystem ; Finanzpolitik ; Haushaltsdefizit ; Schätzung ; OECD-Staaten ; Europäische Wirtschafts- und Währungsunion ; Konvergenzkriterien ; EU-Staaten

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Heinemann, Friedrich
• Event: Veröffentlichung
• (who): Zentrum für Europäische Wirtschaftsforschung (ZEW)
• (where): Mannheim
• (when): 1999

Further information

• Handle: http://hdl.handle.net/10419/24291
• Last update: 10.03.2025, 11:44 AM CET