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| Author: | Hagen, J. von Mundschenk, S. |
| Title: | The political economy of policy coordination in the EMU |
| Journal: | Swedish Economic Policy Review
2001 : SPRING, VOL. 8:1, p. 107-138 |
| Index terms: | EUROPEAN MONETARY SYSTEM ECONOMIC POLICY ECONOMIC INTEGRATION |
| Language: | eng |
| Abstract: | The beginning of the Third Stage of the Economic and Monetary Union has changed the quality of economic policy making of the member states, as EMU creates new and amplifies existing externalities of economic policies among them. In this paper, the authors analyze the resulting interactions between a single monetary policy and national fiscal policies in the short and the long run. In the long run, monetary policy and fiscal policies are independent, and there is no need for coordination beyond deficit constraints. In the short run, when changes in nominal demand affect real output, monetary and fiscal policies interact in determining aggregate output at the union level. |
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