Chapter 10: Fiscal Policies in Monetary Unions De Grauwe: Economics of Monetary Union Fiscal policies and the theory of optimum currency areas Germany France P F P G S G S F D’ G D F D’ F D G Y G Y F Two cases France and Germany form monetary and budgetary union
Economics of Monetary Union
G - T + rB = dB/dt + dM/dt
The dynamic implications:s of debt accumulation
Hypothetical evolution of the debt ratios within Euroland assuming that the member countries abide by the pact, and assuming that nominal GDP increases by 5% a year.