Fiscal Rules, Financial Stability and Optimal Currency Areas

Paul De Grauwe; Pasquale Foresti

doi:10.1016/j.econlet.2016.07.010

Fiscal Rules, Financial Stability and Optimal Currency Areas

Paul De Grauwe, Pasquale Foresti

London School of Economics and Political Science

Research output: Contribution to journal › Article › peer-review

7 Citations (Scopus)

Abstract

In this paper we suggest that Eurozone countries face a policy trade-off between: (1) a common rule imposing co-movements in fiscal policy; (2) financial stability; and (3) financial integration. We provide empirical evidence documenting the existence of such a trade-off in the period characterized by the financial crisis and by the sovereign debt crisis.

Original language	English
Pages (from-to)	278-281
Number of pages	4
Journal	Economics Letters
Volume	145
Issue number	C
Early online date	7 Jul 2016
DOIs	https://doi.org/10.1016/j.econlet.2016.07.010
Publication status	Published - Aug 2016
Externally published	Yes

Keywords

Fiscal policy rules
Eurozone
Financial stability
Policy objectives
Optimal Currency Areas

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10.1016/j.econlet.2016.07.010

Cite this

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title = "Fiscal Rules, Financial Stability and Optimal Currency Areas",

abstract = "In this paper we suggest that Eurozone countries face a policy trade-off between: (1) a common rule imposing co-movements in fiscal policy; (2) financial stability; and (3) financial integration. We provide empirical evidence documenting the existence of such a trade-off in the period characterized by the financial crisis and by the sovereign debt crisis.",

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author = "\{De Grauwe\}, Paul and Pasquale Foresti",

year = "2016",

month = aug,

doi = "10.1016/j.econlet.2016.07.010",

language = "English",

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journal = "Economics Letters",

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T1 - Fiscal Rules, Financial Stability and Optimal Currency Areas

AU - De Grauwe, Paul

AU - Foresti, Pasquale

PY - 2016/8

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N2 - In this paper we suggest that Eurozone countries face a policy trade-off between: (1) a common rule imposing co-movements in fiscal policy; (2) financial stability; and (3) financial integration. We provide empirical evidence documenting the existence of such a trade-off in the period characterized by the financial crisis and by the sovereign debt crisis.

AB - In this paper we suggest that Eurozone countries face a policy trade-off between: (1) a common rule imposing co-movements in fiscal policy; (2) financial stability; and (3) financial integration. We provide empirical evidence documenting the existence of such a trade-off in the period characterized by the financial crisis and by the sovereign debt crisis.

KW - Fiscal policy rules

KW - Eurozone

KW - Financial stability

KW - Policy objectives

KW - Optimal Currency Areas

UR - https://www.scopus.com/pages/publications/84978194757

U2 - 10.1016/j.econlet.2016.07.010

DO - 10.1016/j.econlet.2016.07.010

M3 - Article

SN - 0165-1765

VL - 145

SP - 278

EP - 281

JO - Economics Letters

JF - Economics Letters

IS - C

ER -

Fiscal Rules, Financial Stability and Optimal Currency Areas

Abstract

Keywords

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