Title
_Monetary and fiscal policy interaction in the EMU: a dynamic game approach _Monetary and fiscal policy interaction in the EMU: a dynamic game approach
Author
Faculty/Department
Faculty of Applied Economics
Publication type
report
Publication
Antwerp , [*]
Subject
Economics
Source (series)
Research paper / Faculty of Applied Economics UFSIA-RUCA ; 2001:004
Volume/pages
36 p.,
Carrier
E
Target language
English (eng)
Abstract
The interaction of monetary and fiscal policies is a crucial issue in a highly integrated economic area as the European Union. We investigate to which extent the EMU, that introduced a common monetary policy and restrictions on fiscal policy at the national level, benefits from macroeconomic policy cooperation due to the various interactions, spillovers and externalities from national macroeconomic policies. To study the effects of policy cooperation we compare the impact of three alternative policy regimes in a stylized dynamic model of the EMU: (i) non-cooperative monetary and fiscal policies, (ii) partial cooperation, and (iii) full cooperation both in symmetric and asymmetric settings where countries differ in structural characteristics, policy preferences and/or bargaining power. The paper introduces an analysis of coalitional behaviour in a dynamic setting into the literature.
Full text (open access)
https://repository.uantwerpen.be/docman/irua/be7f5d/59ceb915.pdf