Citation

Discussion Paper Details

Please find the details for DP2324 in an easy to copy and paste format below:

Full Details

Title: Inflation Targets and Debt Accumulation in a Monetary Union

Author(s): Roel Beetsma and A Lans Bovenberg

Publication Date: December 1999

Keyword(s): Debt Targets, Decentralized Fiscal Policy, Discretionary Monetary Policy, Inflation Targets and Monetary Union

Programme Area(s): International Macroeconomics

Abstract: This paper explores the interaction between centralized monetary policy and decentralized fiscal policy in a monetary union. Discretionary monetary policy suffers from a failure to commit. Moreover, decentralized fiscal policymakers impose externalities on each other through the influence of their debt policies on the common monetary policy. These imperfections can be alleviated by adopting state-contingent inflation targets (to combat the monetary policy commitment problem) and shock-contingent debt targets (to internalize the externalities due to decentralized fiscal policy).

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=2324

Bibliographic Reference

Beetsma, R and Bovenberg, A. 1999. 'Inflation Targets and Debt Accumulation in a Monetary Union'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=2324