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cege - Centrum für Europa-, Governance- und Entwicklungsforschung, Universität Göttingen >
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http://hdl.handle.net/10419/22154
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| Title: | | Monetary and Fiscal Policy Interaction in the Euro Area with different assumptions on the Phillips curve  |
| Authors: | | Bofinger, Peter Mayer, Eric |
| Issue Date: | | 2004 |
| Series/Report no.: | | CeGE discussion paper 27 |
| Abstract: | | In this paper we carry over a static version of a New Keynesian Macro Model to a monetary union. For a similar approach see Uhlig (2002). We will show in particular that a harmonious functioning of a monetary union critically depends on the correlation structure of shocks that hit the currency area. Additionally a high degree of integration in product markets is advantageous for the ECB as it prevents that national real interest rates can drive a wedge between macroeconomic outcomes across member states. In particular small countries are in a vulnerable and therefore in need for fiscal policy as an independent stabilization agent with room to breath. |
| Subjects: | | Monetary policy inflation targeting fiscal policy policy coordination freeriding |
| JEL: | | E50 H70 E60 |
| Document Type: | | Working Paper |
| Appears in Collections: | | cege-Diskussionspapiere, Universität Göttingen
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