Monetary and fiscal policy interaction in the Euro area with different assumptions on the Phillips curve

Arbeitspapier

In this paper we carry over a static version of a New Keynesian Macro Model developed in previous papers (see Bofinger, Mayer, and Wollmershäuser 2002) to a monetary union. For a similar approach see (Uhlig 2002). We will show in particular that a harmonious functioning of a monetary union critically depends on the correlation of shocks that hit the currency area. Additionally a high degree of integration in product markets is advantageous for the ECB as it prevents that national real interest rates can drive a wedge between macroeconomic outcomes across member states. In particular small countries are in a vulnerable position exposed to asymmetric shocks and therefore in need for fiscal policy as an independent stabilization agent with room to breath.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: W.E.P. - Würzburg Economic Papers ; No. 40

Classification and Topics

• Classification: Wirtschaft ; Monetary Policy, Central Banking, and the Supply of Money and Credit: General ; Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General ; State and Local Government; Intergovernmental Relations: General
• Subject: Monetary policy ; inflation targeting ; fiscal policy ; policy coordination ; free-riding ; Geldpolitik ; Finanzpolitik ; Internationale wirtschaftspolitische Koordination ; Ungleichgewichtstheorie ; Phillips-Kurve ; Europäische Wirtschafts- und Währungsunion ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bofinger, Peter ; Mayer, Eric
• Event: Veröffentlichung
• (who): University of Würzburg, Department of Economics
• (where): Würzburg
• (when): 2003

Further information

• Handle: http://hdl.handle.net/10419/48454
• Last update: 10.03.2025, 11:41 AM CET