ISSN:
1573-708X
Keywords:
interest rates
;
financial markets
;
EMU
;
government debt
Source:
Springer Online Journal Archives 1860-2000
Topics:
Economics
Notes:
Abstract In this paper, interest-rate convergence in Europe is related to the behavior of integrated federal political systems. Our main results are: Before the final fixing of exchange rates, national interest rates will converge toward the German bond yield in countries eligible to become EMU members in part because no-bailout clauses are not credible in the starting period of EMU. Should such clauses become more credible after 2002 because the EU government and its redistributive mechanisms remain weak, the “market-discipline hypothesis” has a greater chance to apply. But it may still prove unequal to the task of discouraging excessive fiscal deficits on its own.
Type of Medium:
Electronic Resource
URL:
http://dx.doi.org/10.1023/A:1008234929142
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