Staying Together or Breaking Apart: Policy-Makers' Endogenous Coalition Formation in the European Economic and Monetary Union
University of Antwerp - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Tilburg University
Giovanni Di Bartolomeo
University of Teramo
Jacob C. Engwerda
Tilburg University - Department of Economics
Bas Van Aarle
KU Leuven - LICOS - Centrum voor Transitie-economie; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Radboud University Nijmegen - Department of Economics
CESifo Working Paper Series No. 748; FEEM Working Paper No. 60.2002
In this paper, we analyze coordination of macroeconomic stabilization policies within the EMU by focusing, in a dynamic set-up, on asymmetries, externalities, and the existence of a multi-country context. We study how coalitions among fiscal and monetary authorities are formed and what their effects on the stabilization of output and price are. In particular, our attention is directed to studying the consequences on these issues of different institutional contexts in which policy-makers may act. Among other results, we found that, in the presence of externalities, the occurrence of asymmetries is a necessary but not a sufficient condition for cooperation.
Number of Pages in PDF File: 37
Keywords: Macroeconomic Stabilization, EMU, Coalition Formation
JEL Classification: C70, E17, E58, E61, E63working papers series
Date posted: October 11, 2002
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