Monetary and Fiscal Unification in the EU: A Stylized Analysis
نویسندگان
چکیده
The Economic and Monetary Union (EMU) implies a considerable change in monetary and fiscal policy design in the European Union. With the aid of a two-country version of the Alesina and Tabellini (1987) model, this paper provides a stylized analysis of monetary and fiscal policy interaction in the EMU. It is shown how macroeconomic outcomes are affected by common monetary and fiscal policies, and how outcomes depend on the commitment ability of the ECB when implementing its monetary policy. Moreover, it is analyzed how asymmetries between countries affect outcomes when entering the EMU. © 1999 Elsevier Science Inc.
منابع مشابه
Europe's Gamble
AFTER THREE DECADES, the quest for European monetary unification may well bear fruit on January 1, 1999. On that date the European Union (EU) plans to introduce a common currency, the euro, in member states that satisfy specified macroeconomic convergence criteria. If the Economic and Monetary Union (EMU) project is launched on time and with the maximum membership of eleven countries that curre...
متن کاملInflation Bias, Time Inconsistency of Monetary and Fiscal Policies and Institutional Quality
In developing countries, weak institutional quality can increase the probability of applying discretionary policies and can have a great impact on their double-digit inflation. Surico (2008) calculated inflation bias, but he considered just monetary policy and he did not pay attention to the institutions. Therefore, we design a model which considers the discretion in monetary and fiscal policie...
متن کاملEffects of Fiscal and Monetary Policies on the Iranian Economy: An Optimal Control Approach
This paper evaluates the interacted effects of the fiscal and monetary policies on the nominal and real macro-variables of the Iranian economy. Our analysis is thus based on the optimal control theory by which the optimal path of the control variables including monetary and fiscal tools are determined over the period 1963-2006. We also use a macro-econometric model in form of a simultaneous equ...
متن کاملThe Impact of Social damages on the Effectiveness of Fiscal and Monetary Policies: The DSGE Approach
The purpose of this study is to investigate the effect of social damages (divorce, crime and addiction) on the effectiveness of fiscal and monetary policies. To achieve this, the literature on endogenous growth models has been used and the relationships of economic agents have been explained in the form of a dynamic stochastic general equilibrium model. In the designed DSGE model, labor produc...
متن کاملMonetary and Fiscal Policy Interaction in Iran: A Dynamic Stochastic General Equilibrium Approach
Achieving the goals of price stability, sustainable economic growth, and the improvement of many economic variables require coordination between the monetary and financial authorities. In this study, a new modified Keynesian stochastic dynamic equilibrium general equilibrium model is introduced for Iran and in the framework of game theory, optimal policy of fiscal and monetary authorities are d...
متن کامل