Inflation Targets and Debt Accumulation in a Monetary Union

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

Research output: Working paperDiscussion paperOther research output

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Abstract

This paper explores the interaction between centralized monetary policy and decentralized fiscal policy in a monetary union. Discretionary monetary policy su¤ers from a failure to commit. Moreover, decentralized fiscal policymakers impose externalities on each other through the influence of their debt policies on the common monetary policy. These imperfections can be alleviated by adopting state-contingent in‡ation targets (to combat the monetary policy commitment problem) and shock-contingent debt targets (to internalize the externalities due to decentralized fiscal policy).
Original languageEnglish
Place of PublicationTilburg
PublisherMacroeconomics
Number of pages48
Volume1999-108
Publication statusPublished - 1999

Publication series

NameCentER Discussion Paper
Volume1999-108

Fingerprint

Debt
Inflation target
Monetary policy
Monetary union
Externalities
Fiscal policy
Fiscal
Politicians
Debt policy
Commitment problem
Discretionary monetary policy
Imperfections
Interaction

Keywords

  • discretionary monetary policy
  • decentralized fiscal policy
  • monetary union
  • in‡ation targets
  • debt targets

Cite this

Beetsma, R. M. W. J., & Bovenberg, A. L. (1999). Inflation Targets and Debt Accumulation in a Monetary Union. (CentER Discussion Paper; Vol. 1999-108). Tilburg: Macroeconomics.
Beetsma, R.M.W.J. ; Bovenberg, A.L. / Inflation Targets and Debt Accumulation in a Monetary Union. Tilburg : Macroeconomics, 1999. (CentER Discussion Paper).
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Beetsma, RMWJ & Bovenberg, AL 1999 'Inflation Targets and Debt Accumulation in a Monetary Union' CentER Discussion Paper, vol. 1999-108, Macroeconomics, Tilburg.

Inflation Targets and Debt Accumulation in a Monetary Union. / Beetsma, R.M.W.J.; Bovenberg, A.L.

Tilburg : Macroeconomics, 1999. (CentER Discussion Paper; Vol. 1999-108).

Research output: Working paperDiscussion paperOther research output

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KW - in‡ation targets

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Beetsma RMWJ, Bovenberg AL. Inflation Targets and Debt Accumulation in a Monetary Union. Tilburg: Macroeconomics. 1999. (CentER Discussion Paper).