Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/86178
Authors: 
Flotho, Stefanie
Year of Publication: 
2012
Series/Report no.: 
Discussion Paper Series, University of Freiburg, Department of International Economic Policy 20
Abstract: 
This paper explicitly models strategic interaction between two independent national fiscal authorities and a single central bank in a simple New Keynesian model of a monetary union. Monetary policy is constrained by the zero lower bound on nominal interest rates. Coordination of fiscal policies does not always lead to the best welfare effects. It depends on the nature of the shocks whether governments prefer to coordinate or not coordinate. The size of the government multipliers depend on the combination of the intraunion competitiveness parameters. They get larger in case of implementation lags of fiscal policy.
Subjects: 
Monetary Union
Fiscal Policy
Zero Lower Bound on nominal interest rates
zero interest rate policy
Non-coordination
JEL: 
E31
E52
E58
E61
E62
E63
F33
Document Type: 
Working Paper

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