The stability pact and feedback policy effects - Archive ouverte HAL Access content directly
Preprints, Working Papers, ... Year :

The stability pact and feedback policy effects



We use a two-country dynamic model in a monetary union in which we introduce a wealth private behaviour. We study the implications of public debt on monetary and fiscal policies in the short and the long run. We analyse the effects of asymmetric fiscal policies in Euroland: the first country has fiscal room for manoeuvre whereas the second country is fettered by the Stability Pact. We show that such a situation creates two feedback effects which reduce the efficiency of economic policies. First, because of the inability of one government to implement an expansionist fiscal policy, the other government has to substitute for it in order to stabilise inflation and production. Second, the ECB's involvement in macroeconomic stabilisation will also be exacerbated. The more substantial these effects, the more co-operation is needed between European governments and the ECB.
Fichier principal
Vignette du fichier
wp99-02.pdf (180.93 Ko) Télécharger le fichier
Origin : Files produced by the author(s)

Dates and versions

hal-01064862 , version 1 (17-09-2014)


  • HAL Id : hal-01064862 , version 1
  • SCIENCESPO : 2441/2841


Jérôme Creel. The stability pact and feedback policy effects. 1999. ⟨hal-01064862⟩
103 View
32 Download


Gmail Facebook Twitter LinkedIn More