Fiscal Solvency and Price Level Determination in a Monetary Union

Posted: 11 Dec 2001

See all articles by Paul R. Bergin

Paul R. Bergin

University of California, Davis - Department of Economics; National Bureau of Economic Research (NBER)

Abstract

This paper applies the fiscal theory of price level determination to the case of a monetary union. A fiscal perspective suggests, first, that the focus of past studies on seigniorage, per se, may be misplaced. Second, a rise in the level of debt by one member government can raise the common price level throughout the union, suggesting a role for fiscal rules. Third, conditions are discussed under which fiscal solvency is not necessary for each member government in a monetary union.

Keywords: Monetary union, Fiscal theory of the price level, Fiscal rules

JEL Classification: E31, E63, F36

Suggested Citation

Bergin, Paul R., Fiscal Solvency and Price Level Determination in a Monetary Union. Available at SSRN: https://ssrn.com/abstract=252348

Paul R. Bergin (Contact Author)

University of California, Davis - Department of Economics ( email )

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