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Monetary and fiscal policy design in the EMU: An overview

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  • Aarle, B. van

    (Tilburg University)

  • Bartolomeo, G. di
  • Engwerda, J.C.

    (Tilburg University)

  • Plasmans, J.E.J.

    (Tilburg University)

Abstract

The interaction of monetary and fiscal policies is a crucial issue in a highly integrated economic area such as the European Union. This paper analyzes the design of monetary and fiscal policies in the EMU. To do so, the paper starts with an overview of the most important aspects. Next, it analyzes monetary and fiscal policy interaction in a stylized model of a monetary union, in which monetary and fiscal policy design is modeled as a dynamic stabilization game. Macroeconomic policy making and adjustment are studied under alternative forms of cooperation and in both symmetric and asymmetric settings. Copyright Kluwer Academic Publishers 2002

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Bibliographic Info

Paper provided by Tilburg University in its series Open Access publications from Tilburg University with number urn:nbn:nl:ui:12-91766.

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Date of creation: 2002
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Publication status: Published in Open Economies Review (2002) v.13, p.321-340
Handle: RePEc:ner:tilbur:urn:nbn:nl:ui:12-91766

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Web page: http://www.tilburguniversity.edu/

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  1. Engwerda, J.C., 1997. "The infinite horizon open-loop Nash LQ-game," Open Access publications from Tilburg University, Tilburg University urn:nbn:nl:ui:12-153800, Tilburg University.
  2. Dixit, Avinash, 2000. "A Repeated Game Model of Monetary Union," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 110(466), pages 759-80, October.
  3. Engwerda, Jacob C. & van Aarle, Bas & Plasmans, Joseph E. J., 2002. "Cooperative and non-cooperative fiscal stabilization policies in the EMU," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 26(3), pages 451-481, March.
  4. Aarle, B. van & Engwerda, J.C. & Plasmans, J.E.J., 2001. "Monetary and Fiscal Policy Interaction in the EMU: A Dynamic Game Approach," Open Access publications from Tilburg University, Tilburg University urn:nbn:nl:ui:12-88307, Tilburg University.
  5. Andrew Hughes Hallett & Laura Piscitelli, 1999. "EMU in Reality: The Effect of a Common Monetary Policy on Economies with Different Transmission Mechanisms," Empirica, Springer, Springer, vol. 26(4), pages 337-358, December.
  6. Reinhard Neck & Engelbert Dockner, 1995. "Commitment and coordination in a dynamic game model of international economic policy-making," Open Economies Review, Springer, Springer, vol. 6(1), pages 5-28, January.
  7. Beetsma, Roel & Uhlig, Harald, 1999. "An Analysis of the Stability and Growth Pact," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 109(458), pages 546-71, October.
  8. De Grauwe, Paul, 2000. "Monetary Policies In The Presence Of Asymmetries," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2393, C.E.P.R. Discussion Papers.
  9. Turnovsky, Stephen J & Basar, Tamer & d'Orey, Vasco, 1988. "Dynamic Strategic Monetary Policies and Coordination in Interdependent Economies," American Economic Review, American Economic Association, American Economic Association, vol. 78(3), pages 341-61, June.
  10. Brigitte Godbillon & Moïse Sidiropoulos, 2001. "Designing Fiscal Institutions in a Monetary Union," Open Economies Review, Springer, Springer, vol. 12(2), pages 163-179, April.
  11. Bas Van Aarle & Jacob Engwerda & Joseph Plasmans & Arie Weeren, 2001. "Macroeconomic Policy Interaction under EMU: A Dynamic Game Approach," Open Economies Review, Springer, Springer, vol. 12(1), pages 29-60, January.
  12. Daniel Gros & Carsten Hefeker, 2002. "One Size Must Fit All: National Divergences in a Monetary Union," German Economic Review, Verein für Socialpolitik, Verein für Socialpolitik, vol. 3(3), pages 247-262, 08.
  13. Buti, Marco & Franco, Daniele & Ongena, Hedwig, 1998. "Fiscal Discipline and Flexibility in EMU: The Implementation of the Stability and Growth Pact," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 14(3), pages 81-97, Autumn.
  14. Aarle, B. van & Bartholomeo, G. di & Engwerda, J.C. & Plasmans, J.E.J., 2001. "Coalitional behavior in an open-loop LQ-differential game for the EMU," Open Access publications from Tilburg University, Tilburg University urn:nbn:nl:ui:12-88305, Tilburg University.
  15. Paul De Grauwe, 2000. "Monetary Policies in the Presence of Asymmetries," Journal of Common Market Studies, Wiley Blackwell, Wiley Blackwell, vol. 38(4), pages 593-612, November.
  16. Hughes Hallett, A J & Ma, Yue, 1996. "Changing Partners: The Importance of Coordinating Fiscal and Monetary Policies within a Monetary Union," The Manchester School of Economic & Social Studies, University of Manchester, University of Manchester, vol. 64(2), pages 115-34, June.
  17. Levine, Paul, 1993. "Fiscal Policy Co-ordination under EMU and the Choice of Monetary Instrument," The Manchester School of Economic & Social Studies, University of Manchester, University of Manchester, vol. 61(0), pages 1-12, Suppl..
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Cited by:
  1. Nicola Acocella & Giovanni Bartolomeo, 2004. "Is a Conservative Central Banker a (Perfect) Substitute for Wage Coordination?," Empirica, Springer, Springer, vol. 31(2), pages 281-294, June.
  2. Giovanni Di Bartolomeo & Debora Di Gioacchino, 2005. "Fiscal-Monetary Policy Coordination And Debt Management: A Two Stage Dynamic Analysis," Macroeconomics, EconWPA 0504024, EconWPA.
  3. Dmitri Blueschke & Reinhard Neck, 2011. "“Core” and “Periphery” in a Monetary Union: A Macroeconomic Policy Game," International Advances in Economic Research, Springer, Springer, vol. 17(3), pages 334-346, August.
  4. Heipertz, Martin, 2003. "The Stability and Growth Pact - Not the best but better than nothing. Reviewing the debate on fiscal policy in Europe's Monetary Union," MPIfG Working Paper 03/10, Max Planck Institute for the Study of Societies.
  5. Neck, Reinhard & Blüschke, Dmitri, 2013. ""Haircuts" for the EMU Periphery: Virtue or Vice?," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79887, Verein für Socialpolitik / German Economic Association.
  6. Reinhard Neck & Dmitri Blueschke, 2014. "“Haircuts” for the EMU periphery: virtue or vice?," Empirica, Springer, Springer, vol. 41(2), pages 153-175, May.
  7. Fabio Balboni & Marco Buti & Martin Larch, 2007. "ECB vs Council vs Commission: Monetary and fiscal policy interactions in the EMU when cyclical conditions are uncertain," European Economy - Economic Papers, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission 277, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.

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