Discussion of Fiscal federalism and monetary unionsby Berriel, Gonzalez-Aguado, Kehoe, and Pastorino

• 成果类型: Article
• 署名作者: Bassetto, Marco; Hall, Jason
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - Minneapolis; University of Minnesota System; Federal Reserve System - USA; Federal Reserve Bank - Minneapolis
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2023.10.005
• 发表日期: 2024
• 关键词: fiscal rules; Fiscal federalism; information frictions; government debt

摘要

The relative desirability of a centralized or decentralized fiscal authority depends on both the borrowing externality identified in Berriel et al. and the informational cost of centralizing spending decisions. It is not ex-ante obvious which force dominates as the number of countries grows, but the institutional design of the European system suggests that the externality dominates in practice. We compare a fully centralized solution with a threshold rule akin to the deficit limits of the Maastricht treaty. When the externality effect dominates, the value of flexibility afforded by deficit limits becomes smaller in a larger union.