Monetary and Fiscal Policy Interaction in the Euro Area with different assumptions on the Phillips curve

Peter Bofinger () and Eric Mayer

No 27, University of Göttingen Working Papers in Economics from University of Goettingen, Department of Economics

Abstract: In this paper we carry over a static version of a New Keynesian Macro Model to a monetary union. For a similar approach see Uhlig (2002). We will show in particular that a harmonious functioning of a monetary union critically depends on the correlation structure of shocks that hit the currency area. Additionally a high degree of integration in product markets is advantageous for the ECB as it prevents that national real interest rates can drive a wedge between macroeconomic outcomes across member states. In particular small countries are in a vulnerable and therefore in need for fiscal policy as an independent stabilization agent with room to breath.

Keywords: Monetary policy; inflation targeting; fiscal policy; policy coordination; freeriding (search for similar items in EconPapers)
JEL-codes: E50 E60 H70 (search for similar items in EconPapers)
Date: 2004
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/22154/1/Bofinger_Mayer27.pdf (application/pdf)

Related works:
Journal Article: Monetary and Fiscal Policy Interaction in the Euro Area with Different Assumptions on the Phillips Curve (2007)
Working Paper: Monetary and Fiscal policy Interaction in the Euro Area with Different Assumptions on the Phillips Curve (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:cegedp:27

Access Statistics for this paper

More papers in University of Göttingen Working Papers in Economics from University of Goettingen, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().