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...

Helvi Kinnunen and Pasi Kuoppamäki examine the sustainability of public finances in Finland and the four main euro area countries. The analytical framework is based on intertemporal budget dynamics. The paper shows that, in spite of the increase in age-related expenditure, the policies implicit...