Does the Maastricht Public Debt Criterion Call for Fiscal Expansion or Contraction?

• 영문명: Does the Maastricht Public Debt Criterion Call for Fiscal Expansion or Contraction?
• 발행기관: 세종대학교 경제통합연구소
• 저자명: Pekka Ahtiala
• 간행물 정보: 『Journal of Economic Integration』제15권 제3호, 397~417쪽, 전체 21쪽
• 주제분류: 경제경영 > 경제학
• 파일형태: PDF
• 발행일자: 2000.09.30

영문 초록

The Maastricht convergence criteria of the Economic and Monetary Union of Europe stipulate that the public debt of a member country may be at most 60 per cent, and the fiscal deficit at most 3 per cent of the GNP, which has led member governments to contract their expenditures. A simple two-country flow equilibrium model demonstrates that if the central banks target the interest rate, the contraction is likely to increase the public debt ratio in many member countries. A contraction by one country unambiguously increases the debt ratio of the other. If the foreign central bank targets the money supply, the contraction is less likely to increase the ratio. The ratio can also be lowered with monetary policy, and the appropriate policy is expansion in both regimes. Simulation with an econometric model shows that, with interest rate targeting, fiscal contraction increases the debt ratios of 3 out of 14 EU countries if the country contracts alone. If all the member countries contract simultaneously with money supply targeting by Germany, the rations of 7 countries increase. These effects persist for four to eleven quarters, whereafter the ratios begin to decline in all the countries except Belgium.

목차

Ⅰ.Introduction

Ⅱ.The Model

Ⅲ.Interest Rate Targeting by the Foreign Central Bank

Ⅳ.Money Supply Targeting by the Foreign Central Bank

Ⅴ.A Test

키워드

Public Debt Ratio Fiscal Correction Maastricht Convergence Criteria