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Endogenous Growth and European Fiscal Rules
[journal article]
Abstract We develop a general equilibrium endogenous growth model of a monetary union between two countries that differ in economic dimension and level of development. By solving transitional dynamics towards the steady state, we examine the impact of fiscal shocks that may lead to excessive deficits. Result... view more
We develop a general equilibrium endogenous growth model of a monetary union between two countries that differ in economic dimension and level of development. By solving transitional dynamics towards the steady state, we examine the impact of fiscal shocks that may lead to excessive deficits. Results suggest that the individual and the whole impact of such deficits depend on which country they occur. In such context, we argue that the small and less developed country should be allowed to temporarily run an excessive deficit, in order to improve economic convergence within the union.... view less
Classification
National Economy
Economic Policy
Public Finance
Document language
English
Publication Year
2009
Page/Pages
p. 849-858
Journal
Applied Economics, 41 (2009) 7
DOI
https://doi.org/10.1080/00036840701604503
ISSN
1466-4283
Status
Postprint; peer reviewed
Licence
PEER Licence Agreement (applicable only to documents from PEER project)