Commentary: Should the European Central Bank and the Federal Reserve Be Concerned about Fiscal Policy?

Canzoneri, Cumby, and Diba have written a very good paper on the relationship between fiscal and monetary policy. It is informative, clear, and persuasive. As the title indicates, the analysis deals exclusively with the cases of the United States and the European Union (EU). In a way, however, these are the countries where the discussion on the connection between fiscal and monetary policy is least interesting. This is because, as the authors themselves persuasively point out, it is very difficult to argue seriously—either theoretically, empirically, or historically—that the United States or the EU have lacked Ricardian fiscal discipline. Clearly, these are not cases of fiscal dominance.