In an economy with wage-setting unions where the government has gains from redistribution, we analyze the incentive of incumbent politicians to implement monetary discipline (e.g., by joining a monetary union) against the adoption of fiscal reforms, or deregulation in product markets. We show that monetary discipline can be a "substitute" both for better (i.e., less distortionary) fiscal policies and for deregulation in product markets.
Dalmazzo, A. (2014). Monetary Discipline as a Substitute for Fiscal Reforms and Market Liberalizations. ECONOMIC NOTES, 43(3), 193-210 [10.1111/ecno.12018].
Monetary Discipline as a Substitute for Fiscal Reforms and Market Liberalizations.
DALMAZZO, ALBERTO
2014-01-01
Abstract
In an economy with wage-setting unions where the government has gains from redistribution, we analyze the incentive of incumbent politicians to implement monetary discipline (e.g., by joining a monetary union) against the adoption of fiscal reforms, or deregulation in product markets. We show that monetary discipline can be a "substitute" both for better (i.e., less distortionary) fiscal policies and for deregulation in product markets.
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https://hdl.handle.net/11365/761041
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