Transatlantic Monetary and Fiscal Policy

40 Pages Posted: 10 Nov 2003  

Bas Van Aarle

Leuven Centre for Irish Studies LCIS; CESifo (Center for Economic Studies and Ifo Institute); Radboud University Nijmegen - Department of Economics

Harry Garretsen

Utrecht University - Utrecht University School of Economics; CESifo (Center for Economic Studies and Ifo Institute); Radboud University Nijmegen - Department of Economics

Florence Huart

Université de Lille I

Date Written: September 2003

Abstract

This paper studies the design, effects and interactions of monetary and fiscal policies in the euro-area and between the euro-area and the non euro-area. To do so, a stylized three-country model of monetary and fiscal policy rules is constructed. It is analyzed how monetary and fiscal rules affect the adjustment dynamics in the individual euro-area countries, the aggregate euro-area and the US, which is used as a proxy of the non euro-area. Four aspects play an important role in the analysis: (i) the consequences of alternative monetary and fiscal policy rules, (ii) transatlantic spillovers and policy interactions, and the dynamics of the euro and euro-area current account, (iii) the consequences of asymmetries between euro-area countries - asymmetries in macroeconomic shocks, macroeconomic structures or policy preferences - and between the euro-area and the US, (iv) the role of alternative degrees of backward and forward looking (expectations) in output and inflation.

Keywords: EMU, fiscal policy, monetary policy

JEL Classification: F31, F41, G15

Suggested Citation

Van Aarle, Bas and Garretsen, Harry and Huart, Florence, Transatlantic Monetary and Fiscal Policy (September 2003). CESifo Working Paper Series No. 1042. Available at SSRN: https://ssrn.com/abstract=456100

Bas Van Aarle (Contact Author)

Leuven Centre for Irish Studies LCIS ( email )

Janseniusstraat 1
Leuven, 3000
Belgium
+32 16 310433 (Phone)
+32 16 310431 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

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)

Harry Garretsen

Utrecht University - Utrecht University School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, 3584 EC
Netherlands
+31 0 30 253 9810 (Phone)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.cesifo.de

Radboud University Nijmegen - Department of Economics ( email )

Nijmegen, 6500 HK
Netherlands
+31 24 361 5889 (Phone)
+31 24 361 1846 (Fax)

Florence Huart

Université de Lille I ( email )

Cité scientifique
Villeneuve d'Ascq Cedex, 59655
France
33 (0)3 20 33 59 98 (Phone)
33 (0)3 20 43 66 55 (Fax)

HOME PAGE: http://florence-huart.univ-lille1.fr/

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