When do cooperation and commitment matter in a monetary union?

Hubert Kempf () and Leopold von Thadden
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Leopold von Thadden: European Central Bank - European Central Bank

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Abstract: This paper offers a framework to study strategic interactions between private players, national fiscal authorities and a common central bank in monetary unions. We establish general conditions, in terms of restrictions on spillover effects of actions by private and public players, under which games that differ in the degree of cooperation and commitment can admit the same equilibrium outcome. We use these conditions to characterize benchmark results on the irrelevance of cooperation and commitment established in recent literature. Moreover, we show for a general setting, in which the benchmark results do not apply, that gains from fiscal cooperation depend on the number of countries and increase as this number gets larger.

Keywords: Monetary policy; Fiscal regimes; Monetary unions; Commitment; Cooperation (search for similar items in EconPapers)
Date: 2013-11
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Citations: View citations in EconPapers (14)

Published in Journal of International Economics, 2013, 91 (2), pp.252-262. ⟨10.1016/j.jinteco.2013.07.007⟩

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Journal Article: When do cooperation and commitment matter in a monetary union? (2013)
Working Paper: When do cooperation and commitment matter in a monetary union? (2013)
Working Paper: When do cooperation and commitment matter in a monetary union? (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:pseptp:hal-01306079

DOI: 10.1016/j.jinteco.2013.07.007

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