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Policy Effectiveness in the Post-ERM Era: Evidence from Six Countries

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Abstract

The objective of this paper is to determine whether ERM-participating countries have experienced a change in the effectiveness of monetary and fiscal policies since the establishment of the ERM. Countries which have come to rely more heavily on fiscal policy instruments as the means of output, price and exchange rate stabilization since the establishment of the ERM (and currently exceed the fiscal criteria) are expected to find the Maastricht fiscal criteria restrictive and perhaps destabilizing. We find that Belgium, Italy and Ireland are the countries that are likely to face the most difficulties.

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Authors and Affiliations

  1. Department of Economics, University College Galway, Galway, Ireland

    Stilianos Fountas

  2. Department of Economics, University of St. Thomas, 2115 Summit Avenue, St. Paul, Minnesota, 55105

    Agapitos Papagapitos

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  1. Stilianos Fountas
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  2. Agapitos Papagapitos
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Fountas, S., Papagapitos, A. Policy Effectiveness in the Post-ERM Era: Evidence from Six Countries. Open Economies Review 8, 189–201 (1997). https://doi.org/10.1023/A:1008241116488

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  • DOI: https://doi.org/10.1023/A:1008241116488

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