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Two-Country Models of Monetary and Fiscal Policy: What Have We Learned? What More Can We Learn?

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Author Info
Joseph Daniels ()
David VanHoose ()

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Abstract

This paper surveys the literature that uses two-country models to analyze monetary and fiscal policy issues faced in interdependent economies. We discuss sources of structural interdependence that researchers typically include in these models. We describe many of the types of policy interactions that researchers have considered and summarize the key results that they have obtained. Finally, we briefly explain the limitations of two-country models and outline directions that this literature might usefully be extended. Copyright Kluwer Academic Publishers 1998

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File URL: http://hdl.handle.net/10.1023/A:1008220801959
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Publisher Info
Article provided by Springer in its journal Open Economies Review.

Volume (Year): 9 (1998)
Issue (Month): 3 (July)
Pages: 265-284
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Handle: RePEc:kap:openec:v:9:y:1998:i:3:p:265-284

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Related research
Keywords: two-country models; monetary policy coordination; fiscal policy coordination;

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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.:
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  23. Fratianni, M. & Von Hagen, J. & Waller, C., 1992. "The Maastricht Way to EMU," Princeton Studies in International Economics 187, International Economics Section, Departement of Economics Princeton University,.
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  25. Bacchetta, Philippe & Caminal, Ramon, 1992. "Optimal seigniorage and financial liberalization," Journal of International Money and Finance, Elsevier, vol. 11(6), pages 518-538, December. [Downloadable!] (restricted)
  26. Henrik Jensen, 1993. "International monetary policy cooperation in economies with centralized wage setting," Open Economies Review, Springer, vol. 4(3), pages 269-285, September. [Downloadable!] (restricted)
  27. Jensen, Henrik, 1996. "The advantage of international fiscal cooperation under alternative monetary regimes," European Journal of Political Economy, Elsevier, vol. 12(3), pages 485-504, November. [Downloadable!] (restricted)
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  28. Canzoneri, Matthew B & Rogers, Carol Ann, 1990. "Is the European Community an Optimal Currency Area? Optimal Taxation versus the Cost of Multiple Currencies," American Economic Review, American Economic Association, vol. 80(3), pages 419-33, June. [Downloadable!] (restricted)
  29. Bryson, Jay H., 1994. "Fiscal policy coordination and flexibility under European Monetary Union: Implications for macroeconomic stabilization," Journal of Policy Modeling, Elsevier, vol. 16(6), pages 541-557, December. [Downloadable!] (restricted)
  30. Michele Fratianni & Juergen Hagen, 1992. "German dominance in the EMS:The empirical evidence," Open Economies Review, Springer, vol. 3(1), pages 127-128, February. [Downloadable!] (restricted)
  31. Benavie, Arthur, 1983. "Achieving external and internal targets with exchange-rate and interest-rate intervention," Journal of International Money and Finance, Elsevier, vol. 2(1), pages 75-85, April. [Downloadable!] (restricted)
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  33. Jay Bryson, 1994. "Macroeconomic stabilization through monetary and fiscal policy coordination: Implications for European Monetary Union," Open Economies Review, Springer, vol. 5(4), pages 307-326, October. [Downloadable!] (restricted)
  34. Canzoneri, Matthew B. & Henderson, Dale W., 1988. "Is sovereign policymaking bad?," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 28(1), pages 93-140, January. [Downloadable!] (restricted)
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  45. Turnovsky, Stephen J. & d'Orey, Vasco, 1989. "The choice of monetary instrument in two interdependent economies under uncertainty," Journal of Monetary Economics, Elsevier, vol. 23(1), pages 121-133, January. [Downloadable!] (restricted)
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  46. Paul Masson & Jacques Melitz, 1991. "Fiscal policy independence in a European Monetary Union," Open Economies Review, Springer, vol. 2(2), pages 113-136, June. [Downloadable!] (restricted)
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  50. Van Gompel, J, 1994. " Stabilization with Wage Indexation and Exchange Rate Flexibility," Journal of Economic Surveys, Blackwell Publishing, vol. 8(3), pages 251-81, September.
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Full references

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. Leonardo Gambacorta, 1999. "What is the Optimal Institutional Arrangement for a Monetary Union?," Temi di discussione (Economic working papers) 356, Bank of Italy, Economic Research Department. [Downloadable!]
    Other versions:
  2. Carmen Díaz-Roldán, . "Coordination of Fiscal Policies in a Monetary Union," Working Papers on International Economics and Finance 00-09, FEDEA. [Downloadable!]
    Other versions:
  3. van Aarle, Bas & Di Bartolomeo, Giovanni & Engwerda, Jacob & Plasmans, Joseph, 2002. "Staying Together or Breaking Apart: Policy-makers' Endogenous Coalitions Formation in the European Economic and Monetary Union," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
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