Optimal Macroeconomic Policies in a Monetary Union: A Dynamic Game Analysis

Macroeconomic Policies in a Monetary Union: A Dynamic Game

We develop a dynamic game model of a two-country monetary union to study strategic interactions between macroeconomic policy-makers facing adaptive inflationary expectations. In this union, governments of participating countries pursue national goals when deciding about fiscal policies, whereas the common central bank’s monetary policy aims at union-wide objectives. For a symmetric demand shock...

Game of Thrones: Accommodating Monetary Policies in a Monetary Union

In this paper we present an application of the dynamic tracking games framework to 1 a monetary union. We use a small stylized nonlinear three-country macroeconomic model of a 2 monetary union to analyse the interactions between fiscal (governments) and monetary (common 3 central bank) policy makers, assuming different objective functions of these decision makers. Using 4 the OPTGAME algorithm ...

Quantitative Determination Of Optimal Fiscal And Monetary Policies: A Stochastic Optimal Control Analysis For Iran

”Core” and “Periphery” in a Monetary Union: A Macroeconomic Policy Game

We use a dynamic game model of a two-country monetary union to study the impacts of an exogenous fall in aggregate demand, the resulting increase in public debt, and the consequences of a sovereign debt haircut for a member country or bloc of the union. In this union, the governments of participating countries pursue national goals when deciding on fiscal policies, whereas the common central ba...

Market Deregulation and Optimal Monetary Policy in a Monetary Union

The global crisis that began in 2008 reheated the debate on market deregulation as a tool to improve economic performance. This paper addresses the consequences of increased flexibility in goods and labor markets for the conduct of monetary policy in a monetary union. We model a two-country monetary union with endogenous product creation, labor market frictions, and price and wage rigidities. W...