Reconsidering The Pros and Cons of Fiscal Policy Co-ordination in a Monetary Union: Should We Set Public Expenditure Targets ?

Abstract

We reconsider the merits of fiscal policy co-ordination in a monetary union distinguishing between and inflation targeting regime and delegation to a weight conservative central bank. We argue that a contractualist approach a la Walsh should be extended to the conduct of fiscal policy, setting explicit public expenditure targets.EMU, Fiscal Leadership, ECB, Fiscal Co-ordination, Inflation Targets