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Christian-Albrechts-Universität zu Kiel

Institut für Volkswirtschaftslehre - Department of Economics
Economics Working Papers

Economics Working Papers: Abstract 2005-18


Nummer

2005-18

Autoren

Volker Clausen, Hans-Werner Wohltmann

 

Titel

 

Monetary and Fiscal Policy in a Large Asymmetric Monetary Union - A Dynamic Three-Country Analysis
Abstract This paper analyzes the dynamic effects of anticipated monetary and fiscal policies in a large monetary union, which is characterized by asymmetric interest rate transmission. We explicitly solve the asymmetric three-country model using the decomposition methods of Aoki (1981)and Fukuda (1993). Anticipated monetary and fiscal expansions lead to negative international spillovers and to intertemporal reversals in the relative effectiveness of policy on member country outputs. Intertemporal international coordination of monetary policies between Euroland and the US is able to stabilize the output adjustment processes induced by an anticipated unilateral fiscal expansion.

Keywords: Monetary Union, Monetary Policy, Fiscal Policy, Policy Coordination

JEL classification: E58, F41

 

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