Fiscal Discipline and Exchange Rate Systems  

Oleh:

Canzoneri, Matthew B. ; Cumby, Robert E. ; Diba, Behzad T.

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Economic Journal (EBSCO) vol. 111 no. 474 (2001), page 667-690.
Topik: fiscal; fiscal discipline; exchange rate; system
Fulltext: 667.pdf (283.15KB)

Ketersediaan

Perpustakaan Pusat (Semanggi) Nomor Panggil: EE28.5 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Isi artikel

A new 'fiscal' theory of price determination has implications for exchange rate systems and common currency areas. We show that deeper monetary integration requires the discipline of a Ricardian regime ; that is, the government must guarantee fiscal solvency for any sequence of prices or exchange rates. Particularly striking results are that a currency peg is not credible without the discipline of a Ricardian regime, and a common currency area is not viable if fiscal policy in two (or more) of the countries in the union is Non - Ricardian. Interestingly, constraints written into the Maastricht Treaty are sufficient for a Ricardian regime.

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