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2011 | 3 | 1 | 1-24

Article title

Fiscal Policies and Monetary Leadership in a Monetary Union with a Deficit-Concerned Central Bank

Content

Title variants

Languages of publication

EN

Abstracts

EN
We consider fiscal and monetary policy interactions in a monetary union under monetary leadership, when the common central bank is concerned with the average fiscal stance of the union. We use a static two-country monetary union model to investigate the policy-mix problem under different regimes of noncooperation, cooperation, and enforced cooperation among fiscal authorities. We find that fiscal policy is unambiguously countercyclical, a feature that is more pronounced under fiscal policy cooperation. Monetary policy can be either countercyclical or procyclical. A central bank concerned about the aggregate fiscal stance is effective in stabilizing output and central budget, but at the expense of inflation stabilization.

Year

Volume

3

Issue

1

Pages

1-24

Physical description

Dates

received
2011-06-27
accepted
2011-10-13

Contributors

References

Document Type

Publication order reference

Identifiers

YADDA identifier

bwmeta1.element.desklight-94c1650a-4f8b-42c4-acce-95563acf1e6d
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