Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/212502 
Year of Publication: 
2002
Series/Report no.: 
BOFIT Discussion Papers No. 4/2002
Publisher: 
Bank of Finland, Institute for Economies in Transition (BOFIT), Helsinki
Abstract: 
This paper examines, in the context of future EMU membership of the Central and Eastern European countries (CEECs), the interaction between fiscal policy and the price level in different exchange rate regimes.The theoretical framework is based on the Fiscal Theory of the Price Level (FTPL).The results show that a credibly fixed exchange rate is inconsistent with fiscal irresponsibility, while adopting the common currency enables the conduct of irresponsible policies with the result that a rise in the level of debt by one member country raises the common price level of the whole union.
Subjects: 
exchange rate regimes
inflation
fiscal theory of the price level
transition economies
Persistent Identifier of the first edition: 
ISBN: 
951-686-824-X
Document Type: 
Working Paper

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