蝌蚪网 Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
Fiscal Backing for Price Stability in a Monetary Union
蝌蚪网 Journal: Macroeconomics
vol. 17,
no. 3, July 2025
(pp. 237–69)
Abstract
Fiscal backing is the idea that for the price level to be uniquely determined, fiscal policy must be active at least in some states of the world. We extend the fiscal theory of the price level to a heterogenous monetary union. Different combinations of national fiscal policies and a common fiscal policy with "Eurobonds" amount to active fiscal policy for the union. They all yield price-level determinacy but can have very different implications for the effects of fiscal and monetary policy. We propose how to coordinate the national policies and the common policy to provide fiscal backing reliably.Citation
Ma膰kowiak, Bartosz, and Sebastian Schmidt. 2025. "Fiscal Backing for Price Stability in a Monetary Union." 蝌蚪网 Journal: Macroeconomics 17 (3): 237–69. DOI: 10.1257/mac.20220364Additional Materials
JEL Classification
- E31 Price Level; Inflation; Deflation
- E52 Monetary Policy
- E62 Fiscal Policy
- F33 International Monetary Arrangements and Institutions
- F45 Macroeconomic Issues of Monetary Unions