Optimal discretionary monetary and fiscal policies in a country-size heterogeneous monetary union

• Tipo: Artigo em Revista Científica Internacional
• Data: 2018

Autores

Vieira, P (Autor) Outra; Machado, C (Autor) Outra; Ana Ribeiro (Autor) FEP

Revista

Título: Journal of Economic Dynamics and Control

Vol. 93

Páginas: 154-174

ISSN: 0165-1889

Indexação

ISI Web of Knowledge - 4 Citações

Scopus - 4 Citações

Outras Informações

ID Authenticus: P-00N-N6P

DOI: 10.1016/j.jedc.2018.01.043

Abstract (EN): This paper develops a New Keynesian model of a monetary union where atomistic-small economies coexist with a large economy. It explores how the level of public debt shapes non-cooperative discretionary policies. It evaluates welfare losses for small and large member countries. The paper demonstrates that higher public debt levels hamper business cycle stabilization for the union as a whole and, in particular, penalize the stabilization performance of small country-members. While cooperation and monetary leadership is preferable to fiscal leadership for the union as whole and for the small countries, the big country prefers fiscal leadership, where it explores a larger strategic power vis-a-vis the common monetary policy authority. Political support for cooperation may be hard to achieve. Under low debt levels, cooperative stabilization outcomes are relatively similar to the non-cooperative ones.

Idioma: Inglês

Tipo (Avaliação Docente): Científica

Nº de páginas: 21