The framework for fiscal policy coordination in EMU has been in effect for three years.The experience gained shows that the rule-based approach provides in principle a feasible solution for policy coordination among a large number of heterogeneous countries whose joint interest is to safeguard...

This paper deals with the interaction of fiscal and monetary policy when the central bank is pursuing a price stability-oriented monetary policy.In particular, we study the durability of the price stability regime when public debt accumulates as a result of ultimately unsustainable deficits.The...