| Abstract: | This paper builds on the papers published by HM Treasury in2003 alongside the UK Government's assessment of the case forEMU entry. The paper considers the potential for fiscal policyto play a greater role in stabilisation policy if the UK wereinside EMU. The paper considers: the scope for strengtheningthe automatic stabilisers and the possible trade-offs; how institutionalchanges could increase the effectiveness of discretionary fiscalpolicy; which fiscal instruments might be most effective; andto what extent stabilisation might be promoted in other ways,such as through enhanced risk sharing by financial markets.(JEL E62, E63) |
