Will Fiscal Policy Be Effective Under EMU?

December 1, 1998

Preview Citation

Format: Chicago

M. Cangiano, and Eric Mottu. Will Fiscal Policy Be Effective Under EMU?, (USA: International Monetary Fund, 1998) accessed December 26, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

European Economic and Monetary Union does not envisage creating a central fiscal authority. Monetary and exchange rate policies will be centralized, but fiscal policy will remain a national responsibility, in line with the subsidiarity principle. This paper argues that monetary union will generate pressures for closer economic integration than currently envisaged. Although not a necessity, a more active central role could then be justified on the grounds of allocative efficiency, redistribution, and stabilization. While in the short term enhanced policy coordination may address those pressures satisfactorily, as economic integration proceeds, the case for a central fiscal authority may become stronger.

Subject: Budget planning and preparation, Expenditure, Fiscal governance, Fiscal policy, Fiscal stabilization, Public financial management (PFM)

Keywords: A number of country, Allocative efficiency, Budget planning and preparation, Central and Eastern Europe, Central government, Common currency, Economic Union, EMU fiscal policy framework, Envisaged EMU fiscal policy framework, EU budget, Europe, Federal budget, Financing government, Fiscal authority, Fiscal governance, Fiscal stabilization, Global, Government of Europe, Levels of government, Monetary union, Policy Coordination, Public expenditure, Public goods, Structural adjustment, WP

Publication Details

Pages:

32
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1998/176
Stock No:

WPIEA1761998
ISBN:

9781451975550
ISSN:

1018-5941

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