The EMU debt criterion: an interpretation

Article Abstract:

European Union member states must satisfy the European Monetary Union's (EMU) debt criterion which include government deficit, inflation, and exchange rates to be eligible to join the monetary union. However, questions about the computation of change in government debt is subject to different interpretations. Member countries can ascertain if they meet the EMU debt criterion by following a Non-Redundant Interpretation which considers other convergence criteria, is country-independent, and is parameterized to account for 'reference value' and 'sufficiently diminishing' requirements.

Administration of General Economic Programs, Intnl Economic Policy, Economic policy, Gross domestic product, International economic relations, National debt, Public debts

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Fiscal adjustments in Europe and Ricardian equivalence

Article Abstract:

Consumption is dependent on permanent disposable income and current deficits are equivalent to future tax payments according to Ricardian equivalence hypothesis. The hypothesis was tested on 14 European countries in the 1990s. The relationships between savings of the private sector and general government deficit, the GDP growth rate and unemployment rate were determined. The results showed the change in consumers' behavior with respect to government deficit, and that expectations of an increase in future wealth are no longer associated with a decrease in deficit.

Europe, Economic aspects

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Money, prices, and the transition to the EMU

Article Abstract:

A variation of the standard P-model developed by Hallman, Porter, and Small (1991) was employed to assess the effects of cross-country spill-over consequences of inflation in European Monetary System members. Data from national inflation rates in the countries of Belgium, France, Germany, Italy, and the Netherlands were employed to ascertain the effects of Exchange Rate Mechanism (ERM) monetary policies. Results indicate that the ERM has steadily eroded the explanatory influence of domestic price gaps.

Management, Interest rates, Monetary policy

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