We examine monetary and fiscal interactions in a monetary union model with uncertainty due to imperfect central bank … transparency. It is first shown that monetary uncertainty discourages excessive taxation and may thus reduce average inflation and … output distortions. However, as countries enter the monetary union, this tax-restraining effect of uncertainty is mitigated …

The paper examines the monetary-fiscal interactions in a monetary union model with uncertainty due to imperfect central … bank transparency. We first show that monetary uncertainty disciplines fiscal policymakers and thereby reduces taxes … uncertainty is mitigated. As a consequence, monetary union enlargement may lead to a more aggressive fiscal stance in some member …

Motivated by the US Fiscal Cli¤ in 2012, this paper considers the short- and longer term impact of uncertainty … generated by scal policy. Empirical evidence shows increases in economic policy uncertainty lower investment and employment …. Investment that is longer-lived and subject to a longer planning horizon responds to policy uncertainty with a lag, while capital …

The paper examines the monetary-fiscal interactions in a monetary union model with uncertainty due to imperfect central … bank transparency. We first show that monetary uncertainty disciplines fiscal policymakers and thereby reduces taxes … uncertainty is mitigated. As a consequence, monetary union enlargement may lead to a more aggressive fiscal stance in some member …