Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/25200
Authors: 
Grimm, Oliver
Ried, Stefan
Year of Publication: 
2007
Series/Report no.: 
SFB 649 discussion paper 2007,028
Abstract: 
We use a two-country model with a central bank maximizing union-wide welfare and two fiscal authorities minimizing comparable, but slightly different country-wide losses. We analyze the rivalry between the three authorities in seven static games. Comparing a homogeneous with a heterogeneous monetary union, we find welfare losses to be significantly larger in the heterogeneous union. The best-performing scenarios are cooperation between all authorities and monetary leadership. Cooperation between the fiscal authorities is harmful to both the whole union's and the country-specific welfare.
Subjects: 
monetary union
heterogeneities
policy game
simultaneous policy
sequential policy
coordination
discretionary policies
JEL: 
E52
E61
F42
Document Type: 
Working Paper

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