Are the characteristics of the exchange rate regime relevant for the degree of fiscal discipline? What are the conclusions for fiscal behavior in Europe after the transition to EMU? These are the central questions that are analyzed in this paper from a theoretical point of view. After a general...

We analyze data from an author‐conducted survey of members of the French and German parliaments on European Monetary Union reform preferences. We consider three potential drivers of preferences: nationality, ideology, and personal characteristics. For European Monetary Union policies like...

Since the beginning of the crisis, euro area governments have experienced greater fiscal stress than governments of advanced economies outside the euro area with weaker fiscal fundamentals. What has been the source of this fragility and how can it be corrected? The cause of the instability in...

Die Bestimmungen zur europäischen Wirtschafts- und Währungsunion (WWU) im Unionsvertrag haben die Anreize für öffentliche Verschuldung verändert. Die Analyse zeigt, daß trotz der Bemühungen, die nationale Eigenverantwortlichkeit zu bewahren, nicht mit einer effektiven Disziplinierung...

Monetary policy and fiscal dynamics are inexorably linked. When a government faces the risk of getting caught in a high debt trap, debt monetization may become an appealing option. However, independent central banks may be able to allay debt concerns without compromising price stability. One...

This study analyzes results from an original survey of members of the French and German parliaments (Assemblée Nationale, Sénat and Bundestag) on economic policies and institutions of the Eurozone. We find that French politicians are significantly more supportive of Eurobonds, a European...

A mechanism to restructure the debt of an insolvent euro country is a missing element in the emerging institutional architecture of the euro area. The introduction of an insolvency procedure for sovereigns faces a dilemma: In the foreseeable future, its introduction would risk pushing Europe...

There is a growing empirical literature studying whether fiscal rules reduce borrowing costs. Nevertheless, it remains an open question whether these rules are effective genuinely or just because they mirror fiscal preferences of politicians and voters. In our analysis of European bond spreads,...