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The political economy of fiscal policy in EMU

Hancké, Bob (2003) The political economy of fiscal policy in EMU. European Political Economy Review, 1 (1). pp. 5-14. ISSN 1742-5697

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This paper treats low inflation in EMU as a collective action problem for Ecofin. The SGP and more broadly the BEPG, operating against a background of the ECB and wage-setting, are the instruments for this. The ECB delegates sanctioning to the member-states while preserving the authority to set interest rates. Labour relations systems in different countries pursue disinflationary wage settlements. The BEPG (including the SGP) therefore have to be understood as a critical element in a signalling game between the ECB, Ecofin and the wagesetting systems.

Item Type: Article
Official URL:
Additional Information: © 2003 European Political Economy Infrastructure Consortium
Divisions: European Institute
Subjects: H Social Sciences > HB Economic Theory
Sets: Departments > European Institute
Collections > Economists Online
Date Deposited: 06 Oct 2008 15:28
Last Modified: 02 Aug 2020 23:41

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