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Fiscal Policy Coordination with Demand Spillovers and Unionised Labour Markets

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  • Dixon, Huw David
  • Santoni, Michele

Abstract

The authors explore the incentives for governments to cooperate by expanding expenditure. They have three countries: two are in a monetary union (the EMU). The labour markets of both the EMU countries are unionized and there is involuntary unemployment in equilibrium. The authors explore the intra- and intercountry effects of changes in bargaining power. They then examine optimal government expenditures in each EMU country; the authors find that there is a positive spillover and that expenditures are strategic complements. The coordinated equilibrium involves higher expenditure than the uncoordinated equilibrium. Copyright 1997 by Royal Economic Society.

Suggested Citation

  • Dixon, Huw David & Santoni, Michele, 1997. "Fiscal Policy Coordination with Demand Spillovers and Unionised Labour Markets," Economic Journal, Royal Economic Society, vol. 107(441), pages 403-417, March.
    • Handle: RePEc:ecj:econjl:v:107:y:1997:i:441:p:403-17
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    Cited by:

    1. Jorge Blázquez & José M. Martín-Moreno, 2002. "Capital privado y competencia internacional: la armonización fiscal nunca es suficiente," Investigaciones Economicas, Fundación SEPI, vol. 26(2), pages 359-372, May.
    2. repec:spo:wpmain:info:hdl:2441/1482 is not listed on IDEAS
    3. Jean-Paul Fitoussi & Francesco Saraceno, 2002. "A Theory of Social Custom of Which Soft Growth May Be One Consequence. Tales of the European Stability Pact," SciencePo Working papers Main hal-01065024, HAL.
    4. repec:spo:wpecon:info:hdl:2441/1482 is not listed on IDEAS
    5. Carmen Díaz-Roldán, "undated". "Coordination of Fiscal Policies in a Monetary Union," Working Papers on International Economics and Finance 00-09, FEDEA.
    6. Jean‐Paul Fitoussi & Francesco Saraceno, 2008. "Fiscal Discipline as a Social Norm: The European Stability Pact," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 10(6), pages 1143-1168, December.
    7. Mr. Roel M. W. J. Beetsma & Mr. Xavier Debrun & Mr. Franc Klaassen, 2001. "Is Fiscal Policy Coordination in EMU Desirable?," IMF Working Papers 2001/178, International Monetary Fund.
    8. repec:spo:wpecon:info:hdl:2441/1422 is not listed on IDEAS
    9. Roel Beetsma & Lans Bovenberg, 2001. "Structural Distortions and Decentralized Fiscal Policies in EMU," CESifo Working Paper Series 473, CESifo.
    10. Rudiger Arnim & Daniele Tavani & Laura Carvalho, 2014. "Redistribution in a Neo-Kaleckian Two-country Model," Metroeconomica, Wiley Blackwell, vol. 65(3), pages 430-459, July.
    11. repec:spo:wpmain:info:hdl:2441/9909 is not listed on IDEAS
    12. Giancarlo Gandolfo, 2016. "International Monetary Integration: Optimum Currency Areas and Monetary Unions," Springer Texts in Business and Economics, in: International Finance and Open-Economy Macroeconomics, edition 2, chapter 20, pages 529-555, Springer.
    13. repec:hal:spmain:info:hdl:2441/9909 is not listed on IDEAS
    14. Nicola Acocella & Giovanni Di Bartolomeo, 2003. "Wage and Public Expenditure Setting in a Monetary Union," Zagreb International Review of Economics and Business, Faculty of Economics and Business, University of Zagreb, vol. 6(1-2), pages 1-16, May - Nov.
    15. repec:spo:wpmain:info:hdl:2441/1422 is not listed on IDEAS
    16. repec:hal:wpspec:info:hdl:2441/1422 is not listed on IDEAS
    17. repec:hal:wpspec:info:hdl:2441/9909 is not listed on IDEAS
    18. Nicola Acocella & Giovanni Di Bartolomeo, 2001. "Partisanship and fiscal policy co-ordination in a monetary union," Macroeconomics 0106003, University Library of Munich, Germany.
    19. repec:hal:spmain:info:hdl:2441/1422 is not listed on IDEAS
    20. repec:spo:wpecon:info:hdl:2441/9909 is not listed on IDEAS
    21. repec:hal:spmain:info:hdl:2441/1482 is not listed on IDEAS
    22. Büttner, Thiess, 1999. "Regional Stabilization by Fiscal Equalization? Theoretical Considerations and Empirical Evidence from Germany," ZEW Discussion Papers 99-23, ZEW - Leibniz Centre for European Economic Research.
    23. Emmanuelle Taugourdeau, 2002. "Imperfect Competition and Fiscal Policy Transmission in a Two-Country Economy," Open Economies Review, Springer, vol. 13(1), pages 47-71, January.
    24. repec:hal:wpspec:info:hdl:2441/1482 is not listed on IDEAS

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