IDEAS home Printed from https://ideas.repec.org/h/spr/dymchp/978-3-642-54248-0_12.html
   My bibliography  Save this book chapter

Interactions Between Fiscal and Monetary Authorities in a Three-Country New-Keynesian Model of a Monetary Union

In: Dynamic Games in Economics

Author

Listed:
  • Tomasz Michalak

    (University of Oxford)

  • Jacob Engwerda

    (Tilburg University)

  • Joseph Plasmans

    (University of Antwerp)

Abstract

In this paper we consider the effectiveness of various coordination arrangements between monetary and fiscal authorities within a monetary union if an economic shock has occurred. We address this problem using a multi-country New-Keynesian model of a monetary union cast in the framework of linear quadratic differential games. Using this model we study various coordination arrangements between fiscal and monetary players, including partial fiscal cooperation between only a subgroup of countries, which, to the best of our knowledge, has not been considered yet in the New-Keynesian literature. Using a simulation study we show that, in many cases and from the global point of view, partial fiscal cooperation between a subgroup of fiscal players is more efficient than non-coordination and that, in general, full cooperation without an appropriate transfer system is not a stable configuration. Furthermore, in case there is no full cooperation we show that the optimal configuration of the coordination structure depends on the type of shock that has occurred. We present a detailed analysis of the relationship between coordination structures and type of shock.

Suggested Citation

  • Tomasz Michalak & Jacob Engwerda & Joseph Plasmans, 2014. "Interactions Between Fiscal and Monetary Authorities in a Three-Country New-Keynesian Model of a Monetary Union," Dynamic Modeling and Econometrics in Economics and Finance, in: Josef Haunschmied & Vladimir M. Veliov & Stefan Wrzaczek (ed.), Dynamic Games in Economics, edition 127, pages 239-288, Springer.
    • Handle: RePEc:spr:dymchp:978-3-642-54248-0_12
    DOI: 10.1007/978-3-642-54248-0_12
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. D. Blueschke & R. Neck & A. Wittmann, 2020. "How relieving is public debt relief? Monetary and fiscal policies in a monetary union during a debt crisis," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 28(2), pages 539-559, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:dymchp:978-3-642-54248-0_12. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.