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Monetary and fiscal unification in the EU: a stylized analysis

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  • van Aarle, Bas
  • Huart, Florence

Abstract

The Economic and Monetary Union (EMU) implies a considerable change in monetary and fiscal policy design in the European Union. With the aid of a two-country version of the Alesina and Tabellini (1987) model, this paper provides a stylized analysis of monetary and fiscal policy interaction in the EMU. It is shown how macroeconomic outcomes are affected by common monetary and fiscal policies and how outcomes depend on the commitment ability of the ECB when implementing its monetary policy. Moreover, it is analyzed how asymmetries between countries affect outcomes when entering EMU.
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  • van Aarle, Bas & Huart, Florence, 1999. "Monetary and fiscal unification in the EU: a stylized analysis," Journal of Economics and Business, Elsevier, vol. 51(1), pages 49-66, January.
  • Handle: RePEc:eee:jebusi:v:51:y:1999:i:1:p:49-66
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    1. Beetsma, Roel M W J & Bovenberg, A Lans, 2000. "Designing Fiscal and Monetary Institutions for a European Monetary Union," Public Choice, Springer, vol. 102(3-4), pages 247-269, March.
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    Cited by:

    1. BARBIER-GAUCHARD Amélie, 2005. "Fiscal federalism, discipline and selection adverse in the EU : Lessons from a theoretical model," Economics Bulletin, AccessEcon, vol. 28(7), pages 1.
    2. Moïse Sidiropoulos & Eleftherios Spyromitros, 2006. "Fiscal Policy in a Monetary Union Under Alternative Labour-Market Structures," Working Papers of BETA 2006-25, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    3. Carmen Díaz-Roldán, "undated". "Coordination of Fiscal Policies in a Monetary Union," Working Papers on International Economics and Finance 00-09, FEDEA.
    4. Hans-Werner Sinn, 1999. "Inflation and Welfare: Comment on Robert Lucas," NBER Working Papers 6979, National Bureau of Economic Research, Inc.
    5. Banerjee, Gaurango, 2001. "Rules and discretion with common central bank and separate fiscal authorities," Journal of Economics and Business, Elsevier, vol. 53(1), pages 45-68.
    6. Luca Onorante, 2006. "Interaction of Fiscal Policies on the Euro Area: How Much Pressure on the ECB?," Economics Working Papers ECO2006/9, European University Institute.
    7. repec:ebl:ecbull:v:5:y:2005:i:11:p:1-8 is not listed on IDEAS

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