We use a simple theoretical model of a monetary union where myopic discretionary fiscal policies generate excessive debt accumulation in steady state and inefficiently delayed debt adjustment following a shock. We advocate the adoption of a flexible debt targeting approach. By setting a long-term debt target and by raising the political cost associated to deviations from the optimal pace of debt reversal following a shock¸ institutional design induces the fiscal policymaker to implement unbiased discretionary responses to shocks. Since the power to discipline fiscal policymakers rests in the hands of national voters, this outcome can be achieved by increasing the transparency of the decision-making process, where national voters understand the long-term consequences of fiscal policies. In practice, we call for clearer and more focused supervision tasks for the European Commission and for a more active role of national Parliaments whenever a disagreement arises between the Commission and a national government.

Abstract. Joint ventures (JVs) are a common form of inter-firm collaboration and, unsurprisingly, the subject of a vast literature, extending from economics to management and business studies. Issues of control are central to the definition of JVs, and this naturally calls for an interpretation in the context of the property rights theory (PRT) of the firm. In a series of seminal papers, Grossman, Hart and Moore (GHM) offer a rigorous framework to predict the allocation of control rights. Notably, under the standard assumptions of GHM, JVs are suboptimal. However, JVs are not suboptimal in more general settings where a number of the original framework's assumptions are relaxed. In the context of PRT, this paper surveys more than 20 contributions that address the optimality of JVs under contract incompleteness. The surveyed papers question the assumptions of GHM and reveal the circumstances in which JVs outperform sole ownership. Although contributions are scattered over time and bibliographical sources, we believe sufficient material has accumulated over 25 years of economic modelling to encourage some systematization. The discussion is organized in an intuitive and non-technical way; in particular, effort is devoted to analysing each paper in detail and providing a unified framework.

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Time inconsistency in monetary policy can be addressed appointing a conservative central banker. But incomplete information about the central banker's preferences impairs the performance of delegation schemes. Firstly, the ensuing ex‐ante variability of monetary response lowers welfare. Secondly, partial independence schemes may prove inadequate because reputation — not only legal arrangements — defines the actual degree of independence. The incumbent may exploit his reputation to impose too conservative policies whereas, if he lacks reputation, partial independence forces him to accommodate. As a result, simple rules may be preferred. …I do not believe that we should always get the best man for the post; often I fear that we should not even get a tolerable man. (W. Bagehot, The Government of the Bank of England, in ‘Lombard Street’)