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Welfare and Macroeconomic Interdependence

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  • Giancarlo Corsetti
  • Paolo Pesenti

Abstract

The paper develops a simple choice-theoretic model suitable for carrying out welfare" analyses of the international transmission of monetary and fiscal policies. The model can be" solved in closed form and illustrated in terms of the simplest graphical apparatus provide the analysis of macroeconomic interdependence, structural spillovers strategic complementarities with rigorous but intuitive micro-foundations. In contrast with the" traditional literature, our findings emphasize the positive externalities of foreign monetary" expansions and foreign fiscal contractions on domestic welfare, while highlighting the" ambiguous welfare effects of domestic policy shocks.

Suggested Citation

  • Giancarlo Corsetti & Paolo Pesenti, 1997. "Welfare and Macroeconomic Interdependence," NBER Working Papers 6307, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:6307
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