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Monetary and fiscal policy design in the EMU : An overview

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Listed:
  • van Aarle, B.
  • Di Bartolomeo, G.
  • Engwerda, J.C.

    (Tilburg University, School of Economics and Management)

  • Plasmans, J.E.J.

    (Tilburg University, School of Economics and Management)

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
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • van Aarle, B. & Di Bartolomeo, G. & Engwerda, J.C. & Plasmans, J.E.J., 2002. "Monetary and fiscal policy design in the EMU : An overview," Other publications TiSEM bc75d00d-2309-49a5-ad54-3, Tilburg University, School of Economics and Management.
  • Handle: RePEc:tiu:tiutis:bc75d00d-2309-49a5-ad54-335fc7452380
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    References listed on IDEAS

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    1. J.C. Engwerda & B. Aarle & J.E.J. Plasmans, 1999. "The (in)finite horizon open‐loop Nash LQ game:An application to EMU," Annals of Operations Research, Springer, vol. 88(0), pages 251-273, January.
    2. Beetsma, Roel M. W. J. & Lans Bovenberg, A., 1998. "Monetary union without fiscal coordination may discipline policymakers," Journal of International Economics, Elsevier, vol. 45(2), pages 239-258, August.
    3. Bas van Aarle & Jacob Engwerda & Joseph Plasmans, 2002. "Monetary and Fiscal Policy Interaction in the EMU: A Dynamic Game Approach," Annals of Operations Research, Springer, vol. 109(1), pages 229-264, January.
    4. 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, vol. 64(2), pages 115-134, June.
    5. Daniel Gros & Carsten Hefeker, 2002. "One Size Must Fit All: National Divergences in a Monetary Union," German Economic Review, Verein für Socialpolitik, vol. 3(3), pages 247-262, August.
    6. 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, vol. 14(3), pages 81-97, Autumn.
    7. 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, vol. 26(3), pages 451-481, March.
    8. Beetsma, Roel & Uhlig, Harald, 1999. "An Analysis of the Stability and Growth Pact," Economic Journal, Royal Economic Society, vol. 109(458), pages 546-571, October.
    9. Dixit, Avinash, 2000. "A Repeated Game Model of Monetary Union," Economic Journal, Royal Economic Society, vol. 110(466), pages 759-780, October.
    10. Turnovsky, Stephen J & Basar, Tamer & d'Orey, Vasco, 1988. "Dynamic Strategic Monetary Policies and Coordination in Interdependent Economies," American Economic Review, American Economic Association, vol. 78(3), pages 341-361, June.
    11. Andrew Hughes Hallett & Laura Piscitelli, 1999. "EMU in Reality: The Effect of a Common Monetary Policy on Economies with Different Transmission Mechanisms," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 26(4), pages 337-358, December.
    12. Paul De Grauwe, 2000. "Monetary Policies in the Presence of Asymmetries," Journal of Common Market Studies, Wiley Blackwell, vol. 38(4), pages 593-612, November.
    13. Bas Van Aarle & Jacob Engwerda & Joseph Plasmans & Arie Weeren, 2001. "Macroeconomic Policy Interaction under EMU: A Dynamic Game Approach," Open Economies Review, Springer, vol. 12(1), pages 29-60, January.
    14. Brigitte Godbillon & Moïse Sidiropoulos, 2001. "Designing Fiscal Institutions in a Monetary Union," Open Economies Review, Springer, vol. 12(2), pages 163-179, April.
    15. 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, vol. 61(0), pages 1-12, Suppl..
    16. Reinhard Neck & Engelbert Dockner, 1995. "Commitment and coordination in a dynamic game model of international economic policy-making," Open Economies Review, Springer, vol. 6(1), pages 5-28, January.
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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;Austrian Institute for Economic Research;Austrian Economic Association, vol. 31(2), pages 281-294, June.
    2. Joseph Plasmans & Jacob Engwerda & Bas van Aarle & Tomasz Michalak & Giovanni Di Bartolomeo, 2006. "Macroeconomic Stabilization Policies In The Emu: Spillovers, Asymmetries And Institutions," Scottish Journal of Political Economy, Scottish Economic Society, vol. 53(4), pages 461-484, September.
    3. Dmitri Blueschke & Reinhard Neck, 2011. "“Core” and “Periphery” in a Monetary Union: A Macroeconomic Policy Game," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 17(3), pages 334-346, August.
    4. Willi Semmler & Wenlang Zhang, 2004. "Monetary and Fiscal Policy Interactions in the Euro Area," Economic Change and Restructuring, Springer, vol. 31(2), pages 205-227, June.
    5. 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.
    6. Reinhard Neck & Dmitri Blueschke, 2014. "“Haircuts” for the EMU periphery: virtue or vice?," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 41(2), pages 153-175, May.
    7. Janak Raj & Khundrakpam J K & Dipika Das, 2011. "An Empirical Analysis of Monetary and Fiscal Policy Interaction in India," Working Papers id:4504, eSocialSciences.
    8. Giovanni Di Bartolomeo & Debora Di Gioacchino, 2005. "Fiscal-Monetary Policy Coordination And Debt Management: A Two Stage Dynamic Analysis," Macroeconomics 0504024, EconWPA.
    9. Carmen Díaz-Roldan, 2004. "International monetary policy coordination under asymmetric shocks," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 10(1), pages 72-82, February.
    10. Reinhard Neck & Dmitri Blueschke, 2016. "United we stand: on the macroeconomics of a Fiscal union," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 43(2), pages 333-347, May.
    11. René Cabral-Torres, "undated". "Monetary and Fiscal Policy Coordination," Discussion Papers 05/28, Department of Economics, University of York.
    12. 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 2008 - 2015 277, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    13. Chortareas, Georgios & Mavrodimitrakis, Christos, 2017. "Strategic fiscal policies and leadership in a monetary union," European Journal of Political Economy, Elsevier, vol. 47(C), pages 133-147.
    14. repec:kap:iaecre:v:17:y:2011:i:3:p:334-346 is not listed on IDEAS
    15. repec:kap:iaecre:v:10:y:2004:i:1:p:72-82 is not listed on IDEAS

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