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Optimal discretionary monetary and fiscal policies in a country-size heterogeneous monetary union

Paulo Vieira, Celsa Machado and Ana Paula Ribeiro

Journal of Economic Dynamics and Control, 2018, vol. 93, issue C, 154-174

Abstract: This paper develops a New Keynesian model of a monetary union where atomistic-small economies coexist with a large economy. It explores how the level of public debt shapes non-cooperative discretionary policies. It evaluates welfare losses for small and large member countries.

Keywords: Monetary union; Optimal discretionary policies; Country-size asymmetry; Government debt (search for similar items in EconPapers)
JEL-codes: E52 E61 E62 E63 (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:eee:dyncon:v:93:y:2018:i:c:p:154-174