This paper explains a currency crisis as an outcome of a switch in how monetary policy and fiscal policy are coordinated. The paper develops a model of an open economy in which monetary policy starts active, fiscal policy starts passive and, in a particular state of nature, monetary policy switches to passive and fiscal policy switches to active. The probability of the regime switch is endogeno...

3 DIW Economic Bulletin 1.2013 With the crisis in the euro area, the issue of the institutional structure of the monetary union has gained in significance. One problem with regard to the longer-term stability of the euro area is the absence of mechanisms to adequately absorb asymmetric cyclical shocks in the individual member states. Such an instrument is essential in order to be able to implem...

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...

entrepreneurship, as one of the factors affecting economic growth, is also considered among the key factors by economic policymakers. however, in examining the issue of entrepreneurship, it should be noted that women’s and men’s entrepreneurship can be considered as two distinct and separate phenomena. therefore, the main objective of this paper is to investigate the relationship between women&...

Canzoneri, Cumby, and Diba have written a very good paper on the relationship between fiscal and monetary policy. It is informative, clear, and persuasive. As the title indicates, the analysis deals exclusively with the cases of the United States and the European Union (EU). In a way, however, these are the countries where the discussion on the connection between fiscal and monetary policy is l...