Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
967326 | Journal of Monetary Economics | 2007 | 10 Pages |
Abstract
The desirability of fiscal constraints in monetary unions depends critically on whether the monetary authority can commit to following its policies. If it can commit, then debt constraints can only impose costs. If it cannot commit, then fiscal policy has a free-rider problem, and debt constraints may be desirable. This type of free-rider problem is new and arises only because of a time inconsistency problem.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
V.V. Chari, Patrick J. Kehoe,