European Economic Review
Опубликовано на портале: 21-10-2007Avinash K. Dixit European Economic Review. 2001. Vol. 45. No. 4-6. P. 589-613.
This paper constructs various models of the EMU and ECB when member countries have different objectives. Voting in pursuit of national interest can yield moderate and stable inflation. The metaphor of Walsh-type contracts implements a monetary policy rule that averages the member countries' most preferred rules. In a repeated relationship where a country suffering a large adverse shock can use political bargaining to subvert the ECB's commitment, the optimal rule should incorporate some flexibility to forestall that. Finally, freedom of national fiscal policies undermines the ECB's monetary commitment; this may justify fiscal constraints like the Stability and Growth Pact.
Опубликовано на портале: 22-10-2007Avinash K. Dixit, Luisa Lambertini European Economic Review. 2001. Vol. 45. No. 4-6. P. 977-987.
We consider monetary-fiscal policy interactions in a monetary union. If monetary and fiscal authorities have different ideal output and inflation targets, the Nash equilibrium output or inflation or both are beyond the ideal points of all authorities. Leadership of either authority is better. Fiscal discretion entirely negates the advantage of monetary commitment: The optimal monetary rule is equivalent to discretionary leadership of monetary over fiscal policy. Agreement about ideal output and inflation creates a monetary-fiscal symbiosis, yielding the ideal point despite disagreement about the relative weights of the two objectives, for any order of moves, without fiscal coordination, and without monetary commitment.
The Unbearable Tightness of Being in a Monetary Union: Fiscal Restrictions and Regional Stability [статья]
Опубликовано на портале: 03-12-2007Evi Pappa, Vanghelis Vassilatos European Economic Review. 2007. Vol. 51. No. 6. P. 1492-1513.
We study how constrained fiscal policy can affect macroeconomic stability and welfare in a two-region model of a monetary union with sticky prices and distortionary taxation. Both government spending and taxes can be used to stabilize regional variables; however, the best welfare outcome is obtained under some tax variability and constant regional inflations. We use a variety of rules to characterize constrained fiscal policy and find that strict fiscal rules coupled with a monetary policy that targets union-wide inflation result in regional inflation stability and the welfare costs of such rules are not as unbearable as one would expect. Fiscal authorities can enhance welfare by targeting the regional output gap, while targeting regional inflation is less successful since inflation stability is guaranteed by the central bank.