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The Gains from Fiscal Cooperation in the Two Commodity Real Trade Model

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Stephen J. Turnovsky

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Abstract

This paper analyzes the gains from fiscal cooperation within the context of the standard two commodity real trade model. It shows how the adjustment in terms of trade is the critical factor in determining the effects of moving from a noncooperative equilibrium. In general, a noncooperative equilibrium leads to an overexpansion of government expenditure on the export good and an underexpansion on the import good, relative to a cooperative equilibrium. The specific example of a logarithmic economy is also considered. The paper discusses further the welfare effects resulting from the formation of a coalition among two countries.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2466.

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Date of creation: Mar 1989
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Handle: RePEc:nbr:nberwo:2466

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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 & d'Orey, Vasco, 1986. "Monetary Policies in Interdependent Economies with Stochastic Disturbances: A Strategic Approach," Economic Journal, Royal Economic Society, vol. 96(383), pages 696-721, September. [Downloadable!] (restricted)
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  2. John B. Taylor, 1985. "International Coordination in the Design of Macroeconomic Policy Rules," NBER Working Papers 1506, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  3. Canzoneri, Matthew B & Gray, Jo Anna, 1985. "Monetary Policy Games and the Consequences of Non-cooperative Behavior," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(3), pages 547-64, October. [Downloadable!] (restricted)
  4. V.V. Chari & Patrick J. Kehoe, 1989. "International coordination of fiscal policy in limiting economies," Staff Report 121, Federal Reserve Bank of Minneapolis. [Downloadable!]
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  5. Frenkel, Jacob A & Razin, Assaf, 1986. "Fiscal Policies in the World Economy," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 564-94, June. [Downloadable!] (restricted)
  6. David Currie & Paul Levine, 1985. "Macroeconomic Policy Design In An Interdependent World," NBER Chapters, in: International Economic Policy Coordination, pages 228-273 National Bureau of Economic Research, Inc. [Downloadable!]
  7. Frenkel, Jacob A & Razin, Assaf, 1985. "Government Spending, Debt, and International Economic Interdependence," Economic Journal, Royal Economic Society, vol. 95(379), pages 619-36, September. [Downloadable!] (restricted)
  8. Willem H. Buiter & Richard C. Marston, 1985. "International Economic Policy Coordination," NBER Books, National Bureau of Economic Research, Inc, number buit85-1.
  9. Hamada, Koichi, 1976. "A Strategic Analysis of Monetary Interdependence," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 677-700, August. [Downloadable!] (restricted)
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  1. 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!]
    Other versions:
  2. Jorge Blázquez & José M. Martín-Moreno, 2002. "Capital privado y competencia internacional: la armonización fiscal nunca es suficiente," Investigaciones Economicas, Fundación SEPI, vol. 26(2), pages 359-372, May. [Downloadable!]
  3. Weichenrieder, Alfons J., 2000. "Public Procurement in the Presence of Capital Taxation," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  4. Willem Buiter & Anne Sibert, 2004. "Cross-Border Tax Externalities: Are Budget Deficits Too Small?," Birkbeck Working Papers in Economics and Finance 0408, Birkbeck, Department of Economics, Mathematics & Statistics. [Downloadable!]
    Other versions:
  5. Epifani, Paolo & Gancia, Gino A., 2007. "On Globalization and the Growth of Governments," CEPR Discussion Papers 6065, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  6. Emmanuelle Taugourdeau, 2002. "Imperfect Competition and Fiscal Policy Transmission in a Two-Country Economy," Open Economies Review, Springer, vol. 13(1), pages 47-71, January. [Downloadable!] (restricted)
  7. Andersen, Torben M & Spange, Morten, 2002. "International Interdependencies in Fiscal Stabilization Policies," CEPR Discussion Papers 3580, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  8. Holmlund, Bertil & Kolm, Ann-Sofie, 1999. "Economic Integration, Imperfect Competition, and International Policy Coordination," Working Paper Series 1999:7, Uppsala University, Department of Economics. [Downloadable!]
    Other versions:
  9. Andersen, Torben M., 2002. "International Integration, Risk and the Welfare State," IZA Discussion Papers 456, Institute for the Study of Labor (IZA). [Downloadable!]
  10. Roel M.W.J. Beetsma & Henrik Jensen, 2002. "Monetary and fiscal policy interactions in a micro-founded model of a monetary union," Working Paper Series 166, European Central Bank. [Downloadable!]
    Other versions:
  11. Carmen Díaz-Roldán, . "Coordination of Fiscal Policies in a Monetary Union," Working Papers on International Economics and Finance 00-09, FEDEA. [Downloadable!]
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  12. Michael P. Evers, 2007. "Optimum Policy Domains in an Interdependent World," Bonn Econ Discussion Papers bgse12_2007, University of Bonn, Germany. [Downloadable!]
  13. Paolo Epifani & Gino Gancia, 2008. "Openness, Government Size and the Terms of Trade," IEW - Working Papers iewwp359, Institute for Empirical Research in Economics - IEW. [Downloadable!]
    Other versions:
  14. 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)
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