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Coordination Of Monetary And Fiscal Policy In A Monetary Union: Policy Issues And Analytical Models

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  • MATTHEW B. CANZONERI

Abstract

The European Monetary Union raises new and interesting questions about the coordination of monetary and fiscal policy. In this lecture, I discuss some of these questions and the answers that a new class of models—new neoclassical synthesis (NNS) models—is currently giving to them. I will argue that the new questions expose some weaknesses in current NNS modeling; in particular, the models do not seem to explain the positive correlation between national inflation and growth differentials that has been observed in the European data. I also review some recent work that has been done on policy coordination within a currency union.

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  • Matthew B. Canzoneri, 2007. "Coordination Of Monetary And Fiscal Policy In A Monetary Union: Policy Issues And Analytical Models," Manchester School, University of Manchester, vol. 75(s1), pages 21-43, September.
    • Handle: RePEc:bla:manchs:v:75:y:2007:i:s1:p:21-43
    DOI: 10.1111/j.1467-9957.2007.01036.x
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    Cited by:

    1. Lieb, L.M., 2009. "Taking real rigidities seriously: implications for optimal policy design in a currency union," Research Memorandum 032, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).

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