Central Bank Independence and Budget Constraints for a Stable Euro

  title={Central Bank Independence and Budget Constraints for a Stable Euro},
  author={F. Papadia and Gianmarco Ruggiero},
  journal={Open Economies Review},
This paper looks at what economic theory and empirical evidence have to offer about the institutional conditions that are most likely to lead to a stable currency. Both theory and evidence suggest that an independent central bank with the explicit mandate to pursue price stability provides an effective solution to the time-inconsistency problem. The EMU institutional set-up is well-equipped to support a stability-oriented monetary policy. The ECB appears to be the most independent central bank… Expand
Strategic Interactions Among Central Bank and National Fiscal Authorities in a Monetary Union Subject to Asymmetric Country Shocks
In this paper we extend Nordhaus’ (Brookings Pap Econ Act (2):139–199, 1994) results to an environment which may represent the current European situation, characterised by a single monetary authorityExpand
Strategic interactions between monetary and fiscal authorities in a monetary union
In this paper we extend Nordhaus’ (1994) results to an environment which may represent the current European situation, characterised by a single monetary authority and several fiscal bodies. We showExpand
The Stability and Growth Pact - Not the Best but Better than Nothing: Reviewing the Debate on Fiscal Policy in Europe’s Monetary Union
This paper aims to review the economic literature on the Maastricht deficit rule and the Stability and Growth Pact. The author tries to expose the contradictions and inconclusiveness of the debate,Expand
This paper surveys and evaluates alternative views regarding the desirable combination of accountability, credibility and transparency in the newly created ECB, including recent controversiesExpand
Doing Away with the Sovereign: Neoliberalism and the Promotion of Market Discipline in European Economic Governance
ABSTRACT This article proposes a critical reading of market discipline and its limitations as a mechanism in European economic governance. Consistent with neoliberal beliefs about market-basedExpand
Political and economic consequences of Economic and Monetary Union : taking stock of the first eight years
Preface Has EMU Made Germany Worse- Off? Monetary Aggregates, Fiscal and Wage Policy in the New Regimec Plus Ca Change ? The European Social Model between 'Economic Governance' and 'Social Europe'Expand
National Central Banks and Community Public Sector Procurement Legislation: A Critical Overview
On 31 March 2004 the Council of Ministers and the European Parliament adopted the Public Sector Procurement Directive, with a national implementation deadline of 31 January 2006. In common withExpand


Central Bank Independence and Monetary Stability
Central bank independence is now a major issue in debates about institutional reforms designed to improve economic performance. Professor Issing's paper is notable for its scholarly discussion of theExpand
Alex Cukierman is well known for his work on central bank behavior. This book brings together a large body of Cukierman's research and integrates it with recent developments in the political economyExpand
Independent Central Banks: Low Inflation at No Cost?
A widely held view suggests that politically independent central banks bring about relatively low and stable inflation rates.' A more debated question is whether one has to "pay" for this goodExpand
Fiscal policymaking and the central bank institutional constraint
In recent years, a developing literature has concentrated on issues such as the influence of central bank independence on the conduct of monetary policy, and the connected issue as to whether theExpand
Central Bank Independence and Disinflationary Credibility: A Missing Link?
Granting central banks independence from short-term political control is widely assumed to decrease inflation by increasing the credibility of commitments to price stability. This paper analyzesExpand
Central Bank Independence
One of the most substantial illustrations of institutional change over the last decades has been the rise of central bank independence (CBI) in many countries. The primary justification for thisExpand
Measuring the Independence of Central Banks and Its Effect on Policy Outcomes
Making the central bank an agency with the mandate and reputation for maintaining price stability is a means by which a government can choose the strength of its commitment to price stability. ThisExpand
Political and monetary institutions and public financial policies in the industrial countries
Institutions and policies Vittorio Grilli, Donato Masciandaro and Guido Tabellini Why do countries as similar as the industrialized OECD countries go through such different experience in terms ofExpand
Monetary Union and Fiscal Policy Discipline
The possible emergence of a monetary union in Europe raises a number of new and difficult questions. A central concern is the implication for fiscal policy-making. Fiscal policy assumes an increasedExpand
Designing institutions for monetary stability
Abstract Lack of credibility or political feasibility are typically cited as serious obstacles to achieving monetary stability. We ask what kind of institutional reforms may help resolve suchExpand