Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/75851 
Year of Publication: 
2001
Series/Report no.: 
CESifo Working Paper No. 437
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
The interaction of monetary and fiscal policies is a crucial issue in a highly integrated economic area as the European Union. We argue that EMU, which introduced a common monetary policy and restrictions on fiscal policy at the national level, increases the need for macroeconomic policy cooperation. To study the effects of policy cooperation we compare the effects of three alternative policy regimes in a stylized dynamic model of a monetary union: (i) noncooperative monetary and fiscal policies, (ii) partial cooperation, and (iii) full cooperation both in symmetric and asymmetric settings where countries differ in structural characteristics, policy preferences and/or bargaining power. The paper introduces an analysis of coalitional behavior in a dynamic setting into the literature.
Document Type: 
Working Paper
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