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Macroeconomic Policy in a Heterogeneous Monetary Union

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Author Info
Oliver Grimm () (Center of Economic Research (CER-ETH) at ETH Zurich)
Stefan Ried () (at ETH Zurich, Institute of Economic Policy I, Humboldt-Universität zu Berlin)

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Abstract

We use a two-country model with a central bank maximizing union-wide welfare and two fiscal authorities minimizing comparable, but slightly different country-wide losses. We analyze the rivalry between the three authorities in seven static games. Comparing a homogeneous with a heterogeneous monetary union, we find welfare losses to be significantly larger in the heterogeneous union. The best-performing scenarios are cooperation between all authorities and monetary leadership. Cooperation between the fiscal authorities is harmful to both the whole union’s and the country-specific welfare.

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Publisher Info
Paper provided by CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich in its series Economics working paper series with number 07/67.

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Length: 48 pages
Date of creation: May 2007
Date of revision:
Handle: RePEc:eth:wpswif:07-67

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Related research
Keywords: monetary union; heterogeneities; policy game; simultaneous policy; sequential policy; coordination; discretionary policies;

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Find related papers by JEL classification:
E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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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. Theresa Fahrenberger & Hans Gersbach, 2007. "Minority Voting and Long-term Decisions," Economics working paper series 07/70, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich. [Downloadable!]
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  2. Hans Gersbach & Volker Hahn, 2008. "Forward Guidance for Monetary Policy: Is It Desirable?," Economics working paper series 08/84, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich. [Downloadable!]
  3. Simone Valente, 2007. "International Status Seeking, Trade, and Growth Leadership," Economics working paper series 07/75, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich. [Downloadable!]
  4. Kerstin Kiefer & Philipp Schorn, 2007. "Auswirkungen der IFRS-Umstellung auf die Risikoprämie von Unternehmensanleihen - Eine empirische Studie für Deutschland, Österreich und die Schweiz," SFB 649 Discussion Papers SFB649DP2007-056, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
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  6. Edward J. Balistreri & Russell H. Hillberry & Thomas F. Rutherford, 2008. "Structural Estimation and Solution of International Trade Models with Heterogeneous Firms," Economics working paper series 08/89, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich. [Downloadable!]
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  7. Simone Valente, 2007. "Human Capital, Resource Constraints and Intergenerational Fairness," Economics working paper series 07/68, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich. [Downloadable!]
  8. Christoph Heinzel & Ralph Winkler, 2007. "The role of environmental and technology policies in the transition to a low-carbon energy industry," Economics working paper series 07/71, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich. [Downloadable!]
  9. Werner Kunz, 2007. "Visualization of Competitive Market Structure by Means of Choice Data," SFB 649 Discussion Papers SFB649DP2007-032, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
  10. Hans Gersbach & Ralph Winkler, 2007. "On the Design of Global Refunding and Climate Change," Economics working paper series 07/69, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich, revised Jul 2007. [Downloadable!]
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  11. Damian S. Damianov & Johannes Gerd Becker, 2008. "Auctions with Variable Supply: Uniform Price versus Discriminatory," Economics working paper series 08/80, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich. [Downloadable!]
  12. Ian A. MacKenzie,, 2008. "On the Sequential Choice of Tradable Permit Allocations," Economics working paper series 08/83, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich. [Downloadable!]
  13. Volker Hahn, 2007. "Information Acquisition by Price-Setters and Monetary Policy," Economics working paper series 07/73, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich. [Downloadable!]
  14. Hans Gersbach & Maik T. Schneider & Olivier Schneller, 2008. "On the Design of Basic-Research Policy," Economics working paper series 08/79, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich. [Downloadable!]
  15. Volodymyr Perederiy, 2007. "Kombinierte Liquiditäts- und Solvenzkennzahlen und ein darauf basierendes Insolvenzprognosemodell für deutsche GmbHs," SFB 649 Discussion Papers SFB649DP2007-060, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
  16. Sebastian Braun & Juliane Scheffel, 2007. "Does International Outsourcing Depress Union Wages?," SFB 649 Discussion Papers SFB649DP2007-033, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
  17. Ralph Winkler, 2007. "Why do ICDPs fail? The relationship between subsistence farming, poaching and eco- tourism in wildlife and habitat conservation," Economics working paper series 07/76, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich. [Downloadable!]
  18. Sebastian Braun & Nadja Dwenger & Dorothea Kübler, 2007. "Telling the Truth May Not Pay Off: An Empirical Study of Centralised University Admissions in Germany," SFB 649 Discussion Papers SFB649DP2007-070, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
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