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Journal Articles Journal of Economic Integration Year : 2002

The European Stability Pact and feedback policy effects


With a two-country dynamic model in a monetary union with wealth private behaviors, we study the implications of public debt on monetary and fiscal policies. The model used has Keynesian features in the short run and Wicksellian ones in the long run. We analyse the effects of asymmetric fiscal policies in Euroland and 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 expansionary fiscal policy, the other government has to substitute for it to reach economic targets. Second, the ECB's involvement in macroeconomic stabilisation will be exacerbated. The more substantial these effects, the more coordination is needed between European governments and the ECB.
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Dates and versions

hal-03417628 , version 1 (05-11-2021)


  • HAL Id : hal-03417628 , version 1
  • SCIENCESPO : 2441/3241


Jérôme Creel. The European Stability Pact and feedback policy effects. Journal of Economic Integration, 2002, 17 (3), pp.570 - 595. ⟨hal-03417628⟩


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