We analyze the role of fiscal-monetary policy interactions and fiscal coordination in EMU under the assumption of strategic wage setting in unionized labour markets. We find that production subsidies and real wage distortions are strategic complements. The literature on macroeconomic stabilisation policies and policy games usually neglects this point and reaches overoptimistic conclusions about the desirable effects of accommodating fiscal policies. Central bank preferences also affect the desirability of fiscal coordination in a monetary union. In fact, contrary to Beetsma and Bovenberg (1998), we find that fiscal coordination improves outcomes in the case of a conservative central banker, whereas it leads to worse outcomes with a populist one.

Acocella, N., Di Bartolomeo, G., Tirelli, P. (2007). Fiscal Leadership and Coordination in a monetary union. OPEN ECONOMIES REVIEW, 18(3), 281-289 [10.1007/s11079-007-9038-4].

Fiscal Leadership and Coordination in a monetary union

TIRELLI, PATRIZIO
2007

Abstract

We analyze the role of fiscal-monetary policy interactions and fiscal coordination in EMU under the assumption of strategic wage setting in unionized labour markets. We find that production subsidies and real wage distortions are strategic complements. The literature on macroeconomic stabilisation policies and policy games usually neglects this point and reaches overoptimistic conclusions about the desirable effects of accommodating fiscal policies. Central bank preferences also affect the desirability of fiscal coordination in a monetary union. In fact, contrary to Beetsma and Bovenberg (1998), we find that fiscal coordination improves outcomes in the case of a conservative central banker, whereas it leads to worse outcomes with a populist one.
Articolo in rivista - Articolo scientifico
Monetary policy - Fiscal policy coordination - Labour unions - Monetary union
English
lug-2007
18
3
281
289
none
Acocella, N., Di Bartolomeo, G., Tirelli, P. (2007). Fiscal Leadership and Coordination in a monetary union. OPEN ECONOMIES REVIEW, 18(3), 281-289 [10.1007/s11079-007-9038-4].
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10281/3369
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