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• W1998442364 abstract "This paper analyses the time inconsistency problem of both exchange rate and fiscal policy in a small open economy. The equilibrium under discretion is characterised by inflation and a deficit. Commitment of the exchange-rate instrument only, e.g. through membership in a European monetary union with low inflation, contributes to price stability but may increase the deficit. Whether the government will prefer this outcome to the discretionary one will depend on the structure of the economy. We conclude that the time inconsistency argument strengthens the case for simultaneous commitment of monetary and fiscal policy for inflation-prone countries joining a monetary union." @default.
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• W1998442364 date "1996-08-01" @default.
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• W1998442364 title "Fiscal policy when monetary policy is tied to the mast" @default.
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• W1998442364 doi "https://doi.org/10.1016/0014-2921(95)00027-5" @default.
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