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| Author: | Dixon, H. D. Santoni, M. |
| Title: | Fiscal policy coordination with demand spillovers and unionised labour markets |
| Journal: | Economic Journal
1997 : MAR, VOL. 107:441, p.403-417 |
| Index terms: | FISCAL POLICY CONTROL DEMAND LABOUR MARKETS |
| Language: | eng |
| Abstract: | This paper explores the incentives for governments to cooperate by expanding expenditure in three countries of which two are in a monetary union (EMU). The labor markets of both the EMU countries are unionised and there is involuntary unemployment in equilibrium. The intra and intercountry effects of changes in bargaining power are explored. Optimal government expenditures in each EMU country are examined: a positive spillover is found, and that expenditures are strategic complements. The coordinated equilibrium involves higher expenditure than the uncoordinated equilibrium. |
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