Abstract
As discussed in the last section, the relevance of interest and exchange rate impulses can be studied under various alternative scenarios. One of the possible extensions of the analysis is the introduction of fiscal consolidation (or retrenchment) policies as prescribed by the Maastricht Treaty, i.e. fiscal policies aiming at the reductions of “excessive” budget deficits and government debt.ó0 The analysis is designed as a case study for a country such as Italy as of the 1980s. On the one hand, Italy exhibits undervalued exchange rates — relative to purchasing power parity (Hill, 1986) — and high interest rates (as seen in sections 5 and 6). On the other hand, Italy — already in the 1980s — suffers from a debt-to-GDP ratio of almost 100%
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© 2000 Springer-Verlag Berlin Heidelberg
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Bohn, F. (2000). Fiscal Consolidation Without EMU. In: Monetary Union and Fiscal Stability. Contributions to Economics. Physica, Heidelberg. https://doi.org/10.1007/978-3-642-57639-3_8
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DOI: https://doi.org/10.1007/978-3-642-57639-3_8
Publisher Name: Physica, Heidelberg
Print ISBN: 978-3-7908-1266-4
Online ISBN: 978-3-642-57639-3
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