Fiscal prerequisites for further monetary convergence in the EMS





EMS, monetary convergence, fiscal divergence


The EMS was established as part of a comprehensive strategy to achieve economic stability throughout the EC, based on convergence through the elimination of regional disparities. To date, monetary convergence has been achieved but fiscal divergence remains a feature of Europe as sovereign states follow sovereign policies. This paper develops a model to examine the dynamic interactions between exporters and domestic producers, taking account of exchange rate changes, and warns that the problem of fiscal imbalance must be addressed.


JEL: F15, F36


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How to Cite

BINI SMAGHI, L. (2013). Fiscal prerequisites for further monetary convergence in the EMS. PSL Quarterly Review, 42(169).