European Monetary Union Towards a Multi-speed ‘Fiscal Adjustment’ Europe

Theodore Chatziapostolou

doi:doi:10.11648/j.ijber.20221104.17

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European Monetary Union Towards a Multi-speed ‘Fiscal Adjustment’ Europe

Theodore Chatziapostolou

Published in International Journal of Business and Economics Research (Volume 11, Issue 4)

Received: 13 July 2022 Accepted: 29 July 2022 Published: 31 August 2022

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Abstract

In recent years, the financial crises that broke out in 2007 and the pandemic crises has brought forth the issue of government debt which again has drawn the attention of economists. The issue of debt becomes more complicated when the analysis concerns member states of a monetary union. In the case of EMU, the need for fiscal cooperation is essential for the stability of the union, yet fiscal cooperation is quite complex. In this paper we will attempt to estimate the size of fiscal multipliers using a VAR model for the member states of EMU for the period 2002-2019, controlling for the level of debt, size of the country and openness of the economy. Findings are in line with the relevant literature and shows that fiscal multiplier is higher in small open countries with less debt in comparison to other countries. These findings raise some important questions for the effectiveness and efficiency of fiscal rules in EMU. Given that multipliers are vary between countries of EMU, as our model suggests, fiscal rules could ultimately lead to multi speed fiscal adjustment Europe since some countries will succeed in restoring their fiscal position faster and more effectively than others.

Published in	International Journal of Business and Economics Research (Volume 11, Issue 4)
DOI	10.11648/j.ijber.20221104.17
Page(s)	257-263
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Fiscal Policy, European Monetary Union, Fiscal Multipliers, Debt, Fiscal Rules, VAR Model

References

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Theodore Chatziapostolou. (2022). European Monetary Union Towards a Multi-speed ‘Fiscal Adjustment’ Europe. International Journal of Business and Economics Research, 11(4), 257-263. https://doi.org/10.11648/j.ijber.20221104.17

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ACS Style

Theodore Chatziapostolou. European Monetary Union Towards a Multi-speed ‘Fiscal Adjustment’ Europe. Int. J. Bus. Econ. Res. 2022, 11(4), 257-263. doi: 10.11648/j.ijber.20221104.17

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AMA Style

Theodore Chatziapostolou. European Monetary Union Towards a Multi-speed ‘Fiscal Adjustment’ Europe. Int J Bus Econ Res. 2022;11(4):257-263. doi: 10.11648/j.ijber.20221104.17

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@article{10.11648/j.ijber.20221104.17,
  author = {Theodore Chatziapostolou},
  title = {European Monetary Union Towards a Multi-speed ‘Fiscal Adjustment’ Europe},
  journal = {International Journal of Business and Economics Research},
  volume = {11},
  number = {4},
  pages = {257-263},
  doi = {10.11648/j.ijber.20221104.17},
  url = {https://doi.org/10.11648/j.ijber.20221104.17},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20221104.17},
  abstract = {In recent years, the financial crises that broke out in 2007 and the pandemic crises has brought forth the issue of government debt which again has drawn the attention of economists. The issue of debt becomes more complicated when the analysis concerns member states of a monetary union. In the case of EMU, the need for fiscal cooperation is essential for the stability of the union, yet fiscal cooperation is quite complex. In this paper we will attempt to estimate the size of fiscal multipliers using a VAR model for the member states of EMU for the period 2002-2019, controlling for the level of debt, size of the country and openness of the economy. Findings are in line with the relevant literature and shows that fiscal multiplier is higher in small open countries with less debt in comparison to other countries. These findings raise some important questions for the effectiveness and efficiency of fiscal rules in EMU. Given that multipliers are vary between countries of EMU, as our model suggests, fiscal rules could ultimately lead to multi speed fiscal adjustment Europe since some countries will succeed in restoring their fiscal position faster and more effectively than others.},
 year = {2022}
}

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TY  - JOUR
T1  - European Monetary Union Towards a Multi-speed ‘Fiscal Adjustment’ Europe
AU  - Theodore Chatziapostolou
Y1  - 2022/08/31
PY  - 2022
N1  - https://doi.org/10.11648/j.ijber.20221104.17
DO  - 10.11648/j.ijber.20221104.17
T2  - International Journal of Business and Economics Research
JF  - International Journal of Business and Economics Research
JO  - International Journal of Business and Economics Research
SP  - 257
EP  - 263
PB  - Science Publishing Group
SN  - 2328-756X
UR  - https://doi.org/10.11648/j.ijber.20221104.17
AB  - In recent years, the financial crises that broke out in 2007 and the pandemic crises has brought forth the issue of government debt which again has drawn the attention of economists. The issue of debt becomes more complicated when the analysis concerns member states of a monetary union. In the case of EMU, the need for fiscal cooperation is essential for the stability of the union, yet fiscal cooperation is quite complex. In this paper we will attempt to estimate the size of fiscal multipliers using a VAR model for the member states of EMU for the period 2002-2019, controlling for the level of debt, size of the country and openness of the economy. Findings are in line with the relevant literature and shows that fiscal multiplier is higher in small open countries with less debt in comparison to other countries. These findings raise some important questions for the effectiveness and efficiency of fiscal rules in EMU. Given that multipliers are vary between countries of EMU, as our model suggests, fiscal rules could ultimately lead to multi speed fiscal adjustment Europe since some countries will succeed in restoring their fiscal position faster and more effectively than others.
VL  - 11
IS  - 4
ER  -

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Author Information

Theodore Chatziapostolou

Department of Economics, National and Kapodistrian University of Athens, Athens, Greece

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APA Style

Theodore Chatziapostolou. (2022). European Monetary Union Towards a Multi-speed ‘Fiscal Adjustment’ Europe. International Journal of Business and Economics Research, 11(4), 257-263. https://doi.org/10.11648/j.ijber.20221104.17

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ACS Style

Theodore Chatziapostolou. European Monetary Union Towards a Multi-speed ‘Fiscal Adjustment’ Europe. Int. J. Bus. Econ. Res. 2022, 11(4), 257-263. doi: 10.11648/j.ijber.20221104.17

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AMA Style

Theodore Chatziapostolou. European Monetary Union Towards a Multi-speed ‘Fiscal Adjustment’ Europe. Int J Bus Econ Res. 2022;11(4):257-263. doi: 10.11648/j.ijber.20221104.17

Copy | Download

@article{10.11648/j.ijber.20221104.17,
  author = {Theodore Chatziapostolou},
  title = {European Monetary Union Towards a Multi-speed ‘Fiscal Adjustment’ Europe},
  journal = {International Journal of Business and Economics Research},
  volume = {11},
  number = {4},
  pages = {257-263},
  doi = {10.11648/j.ijber.20221104.17},
  url = {https://doi.org/10.11648/j.ijber.20221104.17},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20221104.17},
  abstract = {In recent years, the financial crises that broke out in 2007 and the pandemic crises has brought forth the issue of government debt which again has drawn the attention of economists. The issue of debt becomes more complicated when the analysis concerns member states of a monetary union. In the case of EMU, the need for fiscal cooperation is essential for the stability of the union, yet fiscal cooperation is quite complex. In this paper we will attempt to estimate the size of fiscal multipliers using a VAR model for the member states of EMU for the period 2002-2019, controlling for the level of debt, size of the country and openness of the economy. Findings are in line with the relevant literature and shows that fiscal multiplier is higher in small open countries with less debt in comparison to other countries. These findings raise some important questions for the effectiveness and efficiency of fiscal rules in EMU. Given that multipliers are vary between countries of EMU, as our model suggests, fiscal rules could ultimately lead to multi speed fiscal adjustment Europe since some countries will succeed in restoring their fiscal position faster and more effectively than others.},
 year = {2022}
}

Copy | Download

TY  - JOUR
T1  - European Monetary Union Towards a Multi-speed ‘Fiscal Adjustment’ Europe
AU  - Theodore Chatziapostolou
Y1  - 2022/08/31
PY  - 2022
N1  - https://doi.org/10.11648/j.ijber.20221104.17
DO  - 10.11648/j.ijber.20221104.17
T2  - International Journal of Business and Economics Research
JF  - International Journal of Business and Economics Research
JO  - International Journal of Business and Economics Research
SP  - 257
EP  - 263
PB  - Science Publishing Group
SN  - 2328-756X
UR  - https://doi.org/10.11648/j.ijber.20221104.17
AB  - In recent years, the financial crises that broke out in 2007 and the pandemic crises has brought forth the issue of government debt which again has drawn the attention of economists. The issue of debt becomes more complicated when the analysis concerns member states of a monetary union. In the case of EMU, the need for fiscal cooperation is essential for the stability of the union, yet fiscal cooperation is quite complex. In this paper we will attempt to estimate the size of fiscal multipliers using a VAR model for the member states of EMU for the period 2002-2019, controlling for the level of debt, size of the country and openness of the economy. Findings are in line with the relevant literature and shows that fiscal multiplier is higher in small open countries with less debt in comparison to other countries. These findings raise some important questions for the effectiveness and efficiency of fiscal rules in EMU. Given that multipliers are vary between countries of EMU, as our model suggests, fiscal rules could ultimately lead to multi speed fiscal adjustment Europe since some countries will succeed in restoring their fiscal position faster and more effectively than others.
VL  - 11
IS  - 4
ER  -

Copy | Download