Staying together or breaking apart: policy-makers' endogenous coalitions formation in the European Economic and Monetary Union
Faculty of Applied Economics
Antwerpen :UFSIA, 2002
Research paper / Faculty of Applied Economics UFSIA-RUCA ; 2002:013
University of Antwerp
In this paper, we analyze coordination of macroeconomic stabilization policies within the EMU by focusing, in a dynamic set-up, on asymmetries, externalities, and the existence of a multi-country context. We study how coalitions among ¯scal and monetary authorities are formed and what are their e®ects on the stabilization of output and price. In particular, our attention is directed to study the consequences on these issues of di®erent institutional contexts in which policy-makers may act. Among other results, we found that, in the presence of externalities, the occurrence of asymmetries is a necessary but not a su±cient condition for cooperation.