Fiscal Policy in Economic and Monetary Union

Fiscal Policy in Economic and Monetary Union

Theory, Evidence and Institutions

Marco Buti and Daniele Franco

This book explores the origins, rationale, problems and prospects of the European fiscal policy framework. It provides the reader with a roadmap to EMU’s budgetary framework by exploring its theoretical and empirical foundations, uncovering its historical roots and emphasising its supranational nature.


Marco Buti and Daniele Franco

Subjects: economics and finance, money and banking, public finance


1. The actual definition of this medium-term objective requires several factors to be taken into account; see the first part of section 3. 2. Say (1853), p. 483. 3. The Works and Correspondence of David Ricardo, P. Sraffa, ed. (1952–73), vol. IV, p. 197. 4. The Works and Correspondence of David Ricardo, P. Sraffa, ed. (1952–73), vol. IV, pp. 247–8. 5. Premchand (1983), p. 4. 6. Charles Dickens, David Copperfield. 7. U. Hicks relates this view to the objective of reducing the debt and taxation, to the prevailing favourable economic conditions and also to some difficulties in managing the budget. She notes the growth of administrative expertise in budgeting contributed to the development of a different approach in the 1930s. 8. Schumacher, while reporting these views, did not share them. 9. De Viti de Marco goes on to justify deficit finance as a less painful alternative to extraordinary taxation which may penalize liquidity constrained taxpayers. 10. Sir F. Phillips, writing in 1936, quoted in Middleton (1985), p. 82. 11. Memorandum by Keynes for the National Debt Enquiry, 21 June 1945, in Keynes (1971–89), vol. XXVII, pp. 406–7. On the UK experience, Clarke (1998) also notes that ‘in the best Gladstonian tradition . . . On the expenditure side, what mattered was expenditure above the famous “line” in the Exchequer accounts, dating from the Sinking Fund Act of 1875, broadly . . . distinguishing a revenue account from a capital account – but by no means unambiguously . . . Only an...

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