In this paper, we analyze how lack of credibility and transparency of monetary and fiscal policies undermines the effectiveness of macroeconomic policies to isolate the economy from commodity price fluctuations. We develop a general equilibrium model for a commodity exporting economy where macro policies are conducted through rules. We show that the responses of output, aggregate demand, and in...

Political Parties and Macroeconomic Policies and Outcomes in the United States Author(s): Douglas A. Hibbs, Jr. Source: The American Economic Review, Vol. 76, No. 2, Papers and Proceedings of the Ninety-Eighth Annual Meeting of the American Economic Association (May, 1986), pp. 66-70 Published by: American Economic Association Stable URL: http://www.jstor.org/stable/1818737 Accessed: 14-08-2014...

This paper studies the institutional design of the coordination of macroeconomic stabilization policies within a monetary union in the framework of linear quadratic differential games. A central role in the analysis plays the partitioned game approach of the endogenous coalition formation literature. The specific policy recommendations in the EMU context depend on the particular characteristics...

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...