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On the Coordination of National Fiscal Policies in a Monetary Union - Il coordinamento delle politiche fiscali nazionali in un’unione monetaria

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In this paper we analyze the issue of cooperation among national fiscal authorities in a monetary union within the framework of their strategic interactions with the common monetary authority. We find that: a) in the lack of cooperation with the central bank, cooperation among fiscal authorities is not desirable; b) if the authorities have different targets, both fiscal leadership and monetary leadership result in a Pareto improvement with respect to the Nash outcome; however, the central bank is better off acting as a follower rather than as a leader; c) harmonization of targets makes policy coordination unnecessary, unless countries are hit by asymmetric shocks: in this case,either cooperation among national fiscal authorities or state-contingency of targets are necessary to obtain an efficient outcome. These findings are applied to the EMU case. - In questo lavoro analizziamo il problema della cooperazione tra autorità fiscali nazionali in un’unione monetaria nell’ambito delle relazioni strategiche con l’autorità monetaria comune. Troviamo che: a) in mancanza di cooperazione con la banca centrale, la cooperazione tra le autorità fiscali non è desiderabile; b) se le autorità hanno target diversi, sia la leadership fiscale, sia la leadership monetaria comportano un miglioramento paretiano rispetto all’equilibrio di Nash; tuttavia, la banca centrale è in una situazione migliore se agisce da follower piuttosto che da leader; c) l’armonizzazione dei target rende superfluo il coordinamento, a meno che i paesi membri dell’unione siano colpiti da shock asimmetrici: in tal caso, diventano necessari per ottenere un risultato efficiente o la cooperazione tra autorità fiscali nazionali o target state contingent. Questi risultati sono applicati al caso europeo.

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Article provided by Camera di Commercio Industria Artigianato Agricoltura di Genova in its journal Economia Internazionale / International Economics.

Volume (Year): 63 (2010)
Issue (Month): 3 ()
Pages: 273-296

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Handle: RePEc:ris:ecoint:0598
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  1. William D. Nordhaus, 1994. "Policy games: Coordination and Independece in Monetary and Fiscal Policies," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(2), pages 139-216.
  2. Eichengreen, Barry, 1990. "Is Europe an Optimum Currency Area?," CEPR Discussion Papers 478, C.E.P.R. Discussion Papers.
  3. Xavier Sala-i-Martin & Jeffrey Sachs, 1991. "Fiscal Federalism and Optimum Currency Areas: Evidence for Europe From the United States," NBER Working Papers 3855, National Bureau of Economic Research, Inc.
  4. Dixit, Avinash & Lambertini, Luisa, 2001. "Monetary-fiscal policy interactions and commitment versus discretion in a monetary union," European Economic Review, Elsevier, vol. 45(4-6), pages 977-987, May.
  5. Pompeo Posta & Valeria Bonis, 2009. "Strategic Interactions Among Central Bank and National Fiscal Authorities in a Monetary Union Subject to Asymmetric Country Shocks," Open Economies Review, Springer, vol. 20(2), pages 241-263, April.
  6. Dixit, Avinash & Lambertini, Luisa, 2003. "Symbiosis of monetary and fiscal policies in a monetary union," Journal of International Economics, Elsevier, vol. 60(2), pages 235-247, August.
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