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Macroeconomic Stabilization Policies in the EMU: Spillovers, Asymmetries, and Institutions


Joseph Plasmans


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

Tomasz Michalak


University of Antwerp - Department of Economics
January 2005

CESifo Working Paper Series No. 1376

Abstract:     
This paper studies the institutional design of the coordination of macroeconomic stabilization policies within a monetary union in the framework of linear quadratic differential games. A central role in the analysis plays the partitioned game approach of the endogenous coalition formation literature. The specific policy recommendations in the EMU context depend on the particular characteristics of the shocks and the economic structure. In the case of a common shock, fiscal coordination or full policy coordination is desirable. When asymmetric shocks are considered, fiscal coordination improves the performance but full policy coordination doesn't produce further gains in policymakers' welfare.

Number of Pages in PDF File: 38

Keywords: Macroeconomic stabilization, EMU, coalition formation, linear quadratic differential games

JEL Classification: C70, E17, E58, E61, E63

working papers series


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Date posted: January 14, 2005  

Suggested Citation

Plasmans, Joseph E. J., Di Bartolomeo, Giovanni, Engwerda, Jacob C., Van Aarle, Bas and Michalak, Tomasz , Macroeconomic Stabilization Policies in the EMU: Spillovers, Asymmetries, and Institutions (January 2005). CESifo Working Paper Series No. 1376. Available at SSRN: http://ssrn.com/abstract=648501

Contact Information

Joseph E. J. Plasmans (Contact Author)
University of Antwerp - Department of Economics ( email )
Prinsstraat 13
Antwerp, B-2000
Belgium
CESifo (Center for Economic Studies and Ifo Institute for Economic Research)
Poschinger Str. 5
Munich, DE-81679
Germany
Tilburg University
Postbus 90153
Tilburg, DC 5000 LE
Netherlands
Giovanni Di Bartolomeo
University of Teramo
Campus Coste S. Agostino
Teramo, TE 64100
Italy
+39 (0)861.266051 (Phone)
HOME PAGE: http://dibartolomeo.comunite.it/
Jacob C. Engwerda
Tilburg University - Department of Economics ( email )
P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 466 2174 (Phone)
+31 13 466 3280 (Fax)
Bas Van Aarle
KU Leuven - LICOS - Centrum voor Transitie-economie ( email )
Deberiotstraat, 34
Leuven, B-3000
Belgium
+32 16 326591 (Phone)
+32 16 326599 (Fax)
CESifo (Center for Economic Studies and Ifo Institute for Economic Research)
Poschinger Str. 5
Munich, DE-81679
Germany
HOME PAGE: http://www.cesifo.de
Radboud University Nijmegen - Department of Economics ( email )
P.O.Box 9108
6500 HK Nijmegen
Netherlands
+31 24 3616172 (Phone)
+31 24 3611846 (Fax)
Tomasz Michalak
University of Antwerp - Department of Economics ( email )
Prinsstraat 13
Antwerp, B-2000
Belgium
Feedback to SSRN (Beta)


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