Effects of the European economic and monetary union (EMU) on taxation and interest spending of national governments / prepared by Francesco Paolo Mongelli
Annotation This paper examines the interest spending and taxation channels through which EMU could affect the public finances. It provides a framework for examining different views on a further narrowing of interest rate differentials. a model of Blanchard and Fischer is amended to analyze the two channels, and empirical evidence on the tax harmonization process is presented. the paper argues that high-debt and high-tax countries pursuing prudent fiscal policies could benefit the most from EMU: if monetary and widespread fiscal discipline are jointly established, interest rates could decline rapidly, while tax harmonization is likely to be gradual
Bibliography
Includes bibliographical references (pages 33-36)
Notes
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English
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