IDEAS home Printed from https://ideas.repec.org/p/fip/fedlwp/1993-001.html
   My bibliography  Save this paper

Macroeconomic policy effects in a monetary union

Author

Listed:
  • Patricia S. Pollard

Abstract

This paper develops a two-country model of a monetary union. In order to analyze fully the linkages between the countries, the model specifies structural equations for the goods, money and bond markets in each country. Interdependencies arise through trade, the asset markets, and a common currency. The model also includes a supply side for each economy based on an expectations augmented Phillips curve. Using this model it is possible to trace the shifts in aggregate demand and aggregate supply in both countries resulting from a change in fiscal and monetary policies. The results suggest that given asymmetries in current account balances, fiscal policies may cause friction among countries in a European monetary union.

Suggested Citation

  • Patricia S. Pollard, 1993. "Macroeconomic policy effects in a monetary union," Working Papers 1993-001, Federal Reserve Bank of St. Louis.
    • Handle: RePEc:fip:fedlwp:1993-001
    as

    Download full text from publisher

    File URL: http://research.stlouisfed.org/wp/more/1993-001/
    Download Restriction: no
    File URL: http://research.stlouisfed.org/wp/1993/93-001.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Willem H. Buiter, 1988. "Macroeconomic Policy Design in an Interdependent World Economy: An Analysis of Three Contingencies," NBER Chapters, in: International Aspects of Fiscal Policies, pages 121-172, National Bureau of Economic Research, Inc.
    2. Bayoumi, Tamim & Eichengreen, Barry, 1992. "Shocking Aspects of Monetary Unification," Department of Economics, Working Paper Series qt791143kp, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    3. Buiter, W.H. & Kletzer, K.M., 1990. "Reflections On Fiscal Implications Of Common Currency," Papers 613, Yale - Economic Growth Center.
    4. Oudiz, Gilles, 1985. "European Policy Coordination: An Evaluation," CEPR Discussion Papers 81, C.E.P.R. Discussion Papers.
    5. Peter B.. Kenen, 1990. "The Coordination of Macroeconomic Policies," NBER Chapters, in: International Policy Coordination and Exchange Rate Fluctuations, pages 63-108, National Bureau of Economic Research, Inc.
    6. Tamim Bayoumi & Barry Eichengreen, 1992. "Shocking Aspects of European Monetary Unification," NBER Working Papers 3949, National Bureau of Economic Research, Inc.
    7. Richard Portes, 1990. "Macroeconomic Policy Coordination and the European Monetary System," Palgrave Macmillan Books, in: Piero Ferri (ed.), Prospects for the European Monetary System, chapter 11, pages 222-235, Palgrave Macmillan.
    8. Jacob A. Frenkel, 1988. "International Aspects of Fiscal Policies," NBER Books, National Bureau of Economic Research, Inc, number fren88-1, May.
    9. Linda Kole, 1988. "Expansionary Fiscal Policy and International Interdependence," NBER Chapters, in: International Aspects of Fiscal Policies, pages 229-272, National Bureau of Economic Research, Inc.
    10. Gilles Oudiz & Jeffrey Sachs, 1984. "Macroeconomic Policy Coordination among the Industrial Economies," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 15(1), pages 1-76.
    11. Gilles OUDIZ, 1985. "European Policy Coordination: An Evaluation," Discussion Papers (REL - Recherches Economiques de Louvain) 1985036, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    12. Reuven Glick & Michael M. Hutchison, 1992. "Budget rules and monetary union in Europe," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue sep18.
    13. Cohen, Daniel & Wyplosz, Charles, 1989. "The European Monetary Union: An Agnostic Evaluation," CEPR Discussion Papers 306, C.E.P.R. Discussion Papers.
    14. Charles R. BEAN, 1985. "Macroeconomic Policy Co-ordination: Theory and Evidence," Discussion Papers (REL - Recherches Economiques de Louvain) 1985034, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    15. Alogoskoufis,George & Portes,Richard & Papademos,Lucas (ed.), 1991. "External Constraints on Macroeconomic Policy," Cambridge Books, Cambridge University Press, number 9780521405270.
    16. Cohen, Daniel, 1989. "Monetary and fiscal policy in an open economy with or without policy coordination," European Economic Review, Elsevier, vol. 33(2-3), pages 303-309, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Franck Amalric & Henri Sterdyniak, 1989. "Interdépendance et coopération : les leçons d'une maquette," Revue de l'OFCE, Programme National Persée, vol. 26(1), pages 135-156.
    2. repec:hal:spmain:info:hdl:2441/5262 is not listed on IDEAS
    3. Patrick Artus, 1992. "Passage à l'union économique et monétaire en Europe : effets sur la croissance et les politiques budgétaires," Économie et Prévision, Programme National Persée, vol. 106(5), pages 123-137.
    4. Horvath, Julius, 2003. "Optimum currency area theory: A selective review," BOFIT Discussion Papers 15/2003, Bank of Finland Institute for Emerging Economies (BOFIT).
    5. Thomas Willett, 1999. "Developments in the Political Economy of Policy Coordination," Open Economies Review, Springer, vol. 10(2), pages 221-253, May.
    6. Raúl Ramos & Miquel Clar & Jordi Suriñach, 1999. "Specialisation in Europe and Asymmetric Shocks: Potential Risks of EMU," Advances in Spatial Science, in: Manfred M. Fischer & Peter Nijkamp (ed.), Spatial Dynamics of European Integration, chapter 4, pages 63-93, Springer.
    7. Mª del Carmen Díaz Roldán, 1998. "La coordinacion internacional de la politica monetaria en presencia de perturbaciones simetricas: ¿Resulta beneficioso cooperar?," Documentos de Trabajo - Lan Gaiak Departamento de Economía - Universidad Pública de Navarra 9808, Departamento de Economía - Universidad Pública de Navarra.
    8. Nikos Christodoulakis, 2009. "Ten Years Of Emu: Convergence, Divergence And New Policy Priorities," National Institute Economic Review, National Institute of Economic and Social Research, vol. 208(1), pages 86-100, April.
    9. Jacques Mélitz, 1996. "The theory of optimum currency areas, trade adjustment, and trade," Open Economies Review, Springer, vol. 7(2), pages 99-116, April.
    10. Schor, Armand-Denis, 2000. "La théorie des zones monétaires optimales : l’optimum, le praticable, le crédible et le réel," L'Actualité Economique, Société Canadienne de Science Economique, vol. 76(4), pages 545-576, décembre.
    11. Eleni Roussou & Norman Cameron, 2005. "The Impact of the European Economic & Monetary Union on the Stability of the Greek Economy," European Research Studies Journal, European Research Studies Journal, vol. 0(1-2), pages 85-98.
    12. 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.
    13. Julius Horvath & Magda Kandil & Subhash Sharma, 1998. "On the European monetary system: the spillover effects of German shocks and disinflation," Applied Economics, Taylor & Francis Journals, vol. 30(12), pages 1585-1593.
    14. Mikek, Peter, 2009. "Does trade integration contribute to synchronization of shocks in Europe?," MPRA Paper 101413, University Library of Munich, Germany.
    15. Peter Mooslechner & Martin Schuerz, 1999. "International Macroeconomic Policy Coordination: Any Lessons for EMU? A Selective Survey of the Literature," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 26(3), pages 171-199, September.
    16. Scheide, Joachim & Sinn, Stefan, 1987. "Internationale Koordination der Wirtschaftspolitik: Pro und Contra," Kiel Discussion Papers 135, Kiel Institute for the World Economy (IfW Kiel).
    17. Frankel, Jeffrey A., 1988. "Obstacles to International Macroeconomic Policy Coordination," Journal of Public Policy, Cambridge University Press, vol. 8(3-4), pages 353-374, July.
    18. Jacky Fayolle & Paul-Emmanuel Micolet, 1997. "Réalité et déboires de l'espace conjoncturel européen : une régulation sans croissance ?," Revue de l'OFCE, Programme National Persée, vol. 62(1), pages 5-28.
    19. Jean Pisani-Ferry & Claude Bismut, 1993. "L'union économique et monétaire : principes et implications," Revue Économique, Programme National Persée, vol. 44(1), pages 121-142.
    20. Selahattin Dibooglu & Julius Horvath, 1997. "Optimum Currency Areas And European Monetary Unification," Contemporary Economic Policy, Western Economic Association International, vol. 15(1), pages 37-49, January.
    21. Juan Luís Ollero & Raul Ramos & Jordi Suriñach-Caralt, 2001. "Macroeconomic implications of EMU at the regional level," ERSA conference papers ersa01p146, European Regional Science Association.

    More about this item

    Keywords

    Macroeconomics;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedlwp:1993-001. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Anna Oates (email available below). General contact details of provider: https://edirc.repec.org/data/frbslus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.