51. The Impact of EMU on European Transition Economies
- Author:
- David Begg
- Publication Date:
- 04-2000
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- An interesting theory of transition must give a convincing account of structural adjustment and supply side improvement. In this paper, I discuss the incentives for government to undertake costly supply side improvement and how these relate to incentives governing the design of monetary and fiscal policy during transition. The government cares about deviations of inflation, output and government spending from their ideal levels, is subject to a budget constraint in which inflation yields some real revenue, and recognizes the distortionary effects of excess levels of taxation. Costly structural adjustment enhances future output by reducing supply side distortions.
- Topic:
- Economics, Government, and International Political Economy
- Political Geography:
- Europe