Macroeconomic Policy Interaction under EMU: A Dynamic Game Approach

Bas van Aarle, Jacob Engwerda, Joseph Plasmans () and Arie Weeren

Open Economies Review, 2001, vol. 12, issue 1, 29-60

Abstract: In this article, we study macroeconomic stabilization in the Economic and Monetary Union (EMU) using a dynamic game approach. With the aid of a stylized macroeconomic model, this article analyzes the transmission and interaction of national fiscal policies and monetary policy of the European Central Bank (ECB) in the EMU. A special focus is on the effects of labor market institutions in the participating countries and of the introduction of fiscal stringency criteria like those imposed in the Stability and Growth Pact. Copyright Kluwer Academic Publishers 2001

Keywords: macroeconomic stabilization; EMU; linear quadratic differential games; Riccati equations (search for similar items in EconPapers)
Date: 2001
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DOI: 10.1023/A:1026507026304

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