Monetary Union: Fiscal Stabilization In The Face of Asymmetric Shocks

Kirsanova, Tatiana and Satchi, Mathan and Vines, David (2004) Monetary Union: Fiscal Stabilization In The Face of Asymmetric Shocks. Centre for Economic Policy Research Discussion Paper (DP4433). (The full text of this publication is not available from this repository)

The full text of this publication is not available from this repository. (Contact us about this Publication)
Official URL
http://www.cepr.org/pubs/dps/DP4433.asp

Abstract

This Paper investigates the importance of fiscal policy in providing macroeconomic stabilisation in a monetary union. We use a microfounded New Keynesian model of a monetary union that incorporates persistence in inflation, and examine non-cooperative interactions of fiscal and monetary authorities. We find that particularly when inflation is persistent, the use of fiscal policy for stabilisation can significantly improve welfare over and above that which arises through the working of automatic stabilisers. We conclude that a regulatory framework for fiscal policy in a monetary union should allow a role for active fiscal stabilisation.

Item Type: Article
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculties > Social Sciences > School of Economics
Depositing User: Mathan Satchi
Date Deposited: 07 Oct 2008 09:48
Last Modified: 24 Jun 2014 11:25
Resource URI: http://kar.kent.ac.uk/id/eprint/11136 (The current URI for this page, for reference purposes)
  • Depositors only (login required):