In this paper, we focus on the interactions between monetary and fiscal policies in a two-country model of a monetary union. This model has micro foundations in a framework of monopolistic competition and sticky prices. By simulations, we study the combination of optimal policies face to an asymmetric supply shock in a heterogeneous monetary union. Then we want to explore the contribution of fiscal policies in economic stabilisation according to the form of the asymmetry between the countries.
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Paper provided by University of Paris West - Nanterre la Défense, EconomiX in its series EconomiX Working Papers with number
2006-4.