Abstract
In February 1992, the leaders of the European Community (EC) met in Maastricht, Holland, to sign a treaty marking the Community’s determination to achieve economic and monetary union by the end of the century. Now, one year after the signing of the Maastricht Treaty, there is much less confidence that this goal will be met. The adoption of convergence programs placing limits on fiscal spending, and the de facto relinquishment of monetary policy control to the Bundesbank have produced substantial inflation benefits for the EC countries, but have produced no gains in the real economy. The establishment of a convergence requirement and the limits placed on fiscal policy even after the institution of a monetary union, mandated by the Maastricht Treaty, are based on the belief that restricting a country’s ability to run fiscal deficits is necessary for a well functioning monetary union.
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Pollard, P.S. (1994). Monetary and fiscal policy in a monetary union. In: Scobie, H.M. (eds) The European Single Market. Springer, Dordrecht. https://doi.org/10.1007/978-94-011-1304-5_7
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DOI: https://doi.org/10.1007/978-94-011-1304-5_7
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