This paper investigates the macroeconomic implications of different regimes of international fiscal coordination and monetary-fiscal cooperation in a monetary union with independent fiscal authorities, that act strategically vis-a-vis a common central bank. In the presence of other policy goals than cyclical stabilization, such as interest rate smoothing and fiscal stability, we show that coordination among national fiscal authorities can reduce output and inflation volatility relative to the non-cooperative setting in specific circumstances, as in case of demand disturbances, while turning potentially counterproductive otherwise. The adverse effects of union-wide coordinated fiscal measures can be attenuated in a regime of global coordination, namely, when a centralized fiscal stabilization is coordinated with the common monetary policy as well.
Macroeconomic stabilization in the EMU: Rules versus institutions / Lilia, Cavallari; DI GIOACCHINO, Debora. - In: REVIEW OF DEVELOPMENT ECONOMICS. - ISSN 1363-6669. - 9:2(2005), pp. 264-276. [10.1111/j.1467-9361.2005.00275.x]
Macroeconomic stabilization in the EMU: Rules versus institutions
DI GIOACCHINO, Debora
2005
Abstract
This paper investigates the macroeconomic implications of different regimes of international fiscal coordination and monetary-fiscal cooperation in a monetary union with independent fiscal authorities, that act strategically vis-a-vis a common central bank. In the presence of other policy goals than cyclical stabilization, such as interest rate smoothing and fiscal stability, we show that coordination among national fiscal authorities can reduce output and inflation volatility relative to the non-cooperative setting in specific circumstances, as in case of demand disturbances, while turning potentially counterproductive otherwise. The adverse effects of union-wide coordinated fiscal measures can be attenuated in a regime of global coordination, namely, when a centralized fiscal stabilization is coordinated with the common monetary policy as well.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.