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.
2005
01 Pubblicazione su rivista::01a Articolo in rivista
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]
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11573/48096
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