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 increased importance once the monetary policy instrument is lost. The Delors Report has suggested that...

We analyze a two-country zone facing a joint inflationary shock and responding with coordinated and uncoordinated monetary and fiscal policies. We show that the standard presumption that the absence of coordination results in an excessive exchange rate appreciation of the zone with respect to...

Following the fiscal stabilisation of 1926 and the accompanying return of the French franc to the Gold Standard, France enjoyed several years of fast growth and remained immune to the effects of the Great Depression until early 1931. Accounts of this period emphasize the undervaluation of the...