Fiscal Constraints of a Fixed Exchange Rate Regime:

The paper considers whether the implementation of a fixed exchange rate regime requires or implies binding constraints on fiscal policy. The main conclusions are that, from a country perspective, the effective constraint is on the degree of monetary financing, which bears an uncertain relationship t...

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Bibliographic Details
Corporate Author: International Monetary Fund (Author)
Format: Electronic eBook
Language:English
Published: Washington, D.C International Monetary Fund 1989
Series:IMF Working Papers
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Summary:The paper considers whether the implementation of a fixed exchange rate regime requires or implies binding constraints on fiscal policy. The main conclusions are that, from a country perspective, the effective constraint is on the degree of monetary financing, which bears an uncertain relationship to the size of the budget deficit; that, from a systemic perspective, the financial stability of the currency area can be ensured by making the monetary and fiscal authorities independent of one another; and that the case for coordination of fiscal policies-whatever its merits-is not enhanced by the creation of a fixed exchange rate regime
Physical Description:1 Online-Ressource (26 p)
ISBN:1451946686
9781451946680

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