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Is Fiscal Policy Coordination in EMU Desirable? Author info | Abstract | Publisher info | Download info | Related research | Statistics Roel Beetsma () (University of Amsterdam and IMF )
Xavier Debrun
Franc Klaassen
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It is widely argued that Europe's unified monetary policy calls for the international coordination at the fiscal level. We survey the issues involved with such coordination of fiscal policy as a demand management tool and we use a simple model to investigate the circumstances under which coordination may be desirable. It turns out that coordination is beneficial when the correlation of the shocks hitting the various economies is low. However, given the potentially adverse reaction by the ECB (as a result of free-riding and/or a conflict on the orientation of the policy mix), fiscal coordination is likely to be counterproductive when demand or supply shocks are highly symmetric across countries and the governments are unable to acquire a strategic leadership position vis-à-vis the ECB.
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Paper provided by Economics Section, The Graduate Institute of International Studies in its series HEI Working Papers with number
04-2001.
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Date of creation: 10 Jan 2001Date of revision:
Handle: RePEc:gii:giihei:heiwp04-2001Contact details of provider: Postal: P.O. Box 36, 1211 Geneva 21 Phone: ++41 22 731 17 30 Fax: ++41 22 738 43 06 Email: Web page: http://hei.unige.ch/sections/ec/ More information through EDIRC
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Keywords: EMU ; fiscal coordination ; shocks ; demand management ; Other versions of this item:
Paper Roel M. W. J. Beetsma & Xavier Debrun & Franc Klaassen, 2001.
"Is Fiscal Policy Coordination in EMU Desirable? ,"
IMF Working Papers
01/178, International Monetary Fund.
[Downloadable!] Beetsma, Roel & Debrun, Xavier & Klaassen, Frank, 2001.
"Is Fiscal Policy Coordination in EMU Desirable? ,"
CESifo Working Paper Series
CESifo Working Paper No. , CESifo Group Munich.
[Downloadable!] Beetsma, Roel & Debrun, Xavier & Klaassen, Franc, 2001.
"Is Fiscal Policy Coordination in EMU Desirable? ,"
CEPR Discussion Papers
3035, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted) This paper has been announced in the following NEP Reports :
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"Monetary union without fiscal coordination may discipline policymakers ,"
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