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Monetary and Fiscal Policy Design in the EMU: An Overview

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Author Info
Bas van Aarle ()
Giovanni Di Bartolomeo
Jacob Engwerda
Joseph Plasmans

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Abstract

The interaction of monetary and fiscal policies is a crucial issue in a highly integrated economic area such as the European Union. This paper analyzes the design of monetary and fiscal policies in the EMU. To do so, the paper starts with an overview of the most important aspects. Next, it analyzes monetary and fiscal policy interaction in a stylized model of a monetary union, in which monetary and fiscal policy design is modeled as a dynamic stabilization game. Macroeconomic policy making and adjustment are studied under alternative forms of cooperation and in both symmetric and asymmetric settings. Copyright Kluwer Academic Publishers 2002

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File URL: http://hdl.handle.net/10.1023/A:1020609312575
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Publisher Info
Article provided by Springer in its journal Open Economies Review.

Volume (Year): 13 (2002)
Issue (Month): 4 (October)
Pages: 321-340
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:kap:openec:v:13:y:2002:i:4:p:321-340

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Web page: http://www.springerlink.com/link.asp?id=100323

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Related research
Keywords: macroeconomic stabilization; EMU; linear quadratic differential games;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Turnovsky, Stephen J & Basar, Tamer & d'Orey, Vasco, 1988. "Dynamic Strategic Monetary Policies and Coordination in Interdependent Economies," American Economic Review, American Economic Association, vol. 78(3), pages 341-61, June.
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  2. Brigitte Godbillon & Moïse Sidiropoulos, 2001. "Designing Fiscal Institutions in a Monetary Union," Open Economies Review, Springer, vol. 12(2), pages 163-179, April. [Downloadable!] (restricted)
  3. Beetsma, Roel & Uhlig, Harald, 1999. "An Analysis of the Stability and Growth Pact," Economic Journal, Royal Economic Society, vol. 109(458), pages 546-71, October. [Downloadable!] (restricted)
  4. Andrew Hughes Hallett & Laura Piscitelli, 1999. "EMU in Reality: The Effect of a Common Monetary Policy on Economies with Different Transmission Mechanisms," Empirica, Springer, vol. 26(4), pages 337-358, December. [Downloadable!] (restricted)
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  5. Dixit, Avinash, 2000. "A Repeated Game Model of Monetary Union," Economic Journal, Royal Economic Society, vol. 110(466), pages 759-80, October. [Downloadable!] (restricted)
  6. Hughes Hallett, A J & Ma, Yue, 1996. "Changing Partners: The Importance of Coordinating Fiscal and Monetary Policies within a Monetary Union," The Manchester School of Economic & Social Studies, Blackwell Publishing, vol. 64(2), pages 115-34, June.
  7. Levine, Paul, 1993. "Fiscal Policy Co-ordination under EMU and the Choice of Monetary Instrument," The Manchester School of Economic & Social Studies, Blackwell Publishing, vol. 61(0), pages 1-12, Suppl..
  8. Buti, Marco & Franco, Daniele & Ongena, Hedwig, 1998. "Fiscal Discipline and Flexibility in EMU: The Implementation of the Stability and Growth Pact," Oxford Review of Economic Policy, Oxford University Press, vol. 14(3), pages 81-97, Autumn.
  9. Daniel Gros & Carsten Hefeker, 2000. "One Size Must Fit All. National Divergences in a Monetary Union," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  10. Paul De Grauwe, 2000. "Monetary Policies in the Presence of Asymmetries," Journal of Common Market Studies, Blackwell Publishing, vol. 38(4), pages 593-612, November. [Downloadable!] (restricted)
  11. Engwerda, Jacob C. & van Aarle, Bas & Plasmans, Joseph E. J., 2002. "Cooperative and non-cooperative fiscal stabilization policies in the EMU," Journal of Economic Dynamics and Control, Elsevier, vol. 26(3), pages 451-481, March. [Downloadable!] (restricted)
  12. De Grauwe, Paul, 2000. "Monetary Policies In The Presence Of Asymmetries," CEPR Discussion Papers 2393, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  13. Reinhard Neck & Engelbert Dockner, 1995. "Commitment and coordination in a dynamic game model of international economic policy-making," Open Economies Review, Springer, vol. 6(1), pages 5-28, January. [Downloadable!] (restricted)
  14. Beetsma, R. & Bovenberg, L., 1995. "Monetary Union without Fiscal Coordination May Discipline Policymakers," Discussion Paper 59, Tilburg University, Center for Economic Research. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Nicola Acocella & Giovanni Di Bartolomeo, 2003. "Is a conservative central banker a (perfect) substitute for wage coordination?," Macroeconomics 0307011, EconWPA. [Downloadable!]
    Other versions:
  2. Giovanni Di Bartolomeo & Debora Di Gioacchino, 2005. "Fiscal-Monetary Policy Coordination And Debt Management: A Two Stage Dynamic Analysis," Macroeconomics 0504024, EconWPA. [Downloadable!]
    Other versions:
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