Does monetary unification lead to excessive debt accumulation

R.M.W.J. Beetsma, A.L. Bovenberg

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If discretionary monetary policy implies an inflation bias, monetary unification boosts the accumulation of public debt. The additional debt accumulation is welfare reducing only if governments are sufficiently myopic. In the presence of myopic governments, debt ceilings play a useful role in avoiding excessive debt accumulation in a monetary union and allow a conservative, independent central bank to focus on price stability
Original languageEnglish
PublisherUnknown Publisher
Number of pages24
Publication statusPublished - 1995

Publication series

NameCentER Discussion Paper


  • Central Banks
  • Monetary Policy
  • EMS
  • Public Debt
  • monetary economics


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