Monetary and Fiscal Policies Interaction in Monetary Unions
23 Pages Posted: 16 Jan 2018
Date Written: February 2018
In this paper, the literature on the interaction between monetary and fiscal policies in a monetary union is surveyed. By adopting the concept of symbiosis as a starting point, the paper highlights the importance of uncertainty, policy makers' preferences and targets. Then, the role of commitment to policy rules and coordination is addressed. The analysis also focuses on the importance of the data considered for the generation of the policy mix. As a final step, the paper discusses the main results in the literature on public debt management in a monetary union. All the reported theoretical results are then adopted to retrieve policy and institutional implications for the European Monetary Union.
Keywords: Economic shocks, EMU, Monetary and fiscal policies interaction, Monetary union, Policy mix
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