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Strategic fiscal policies and leadership in a monetary union

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Strategic fiscal policies and leadership in a monetary union
Chortareas, G. Mavrodimitrakis, C.
scientific_publication_article
Επιστημονική δημοσίευση - Άρθρο Περιοδικού (EL)
Scientific publication - Journal Article (EN)
2017
We consider the strategic interactions between fiscal and monetary policies in a monetary union when a fiscal authority enjoys a strategic advantage. In particular we depart from the standard literature on strategic interactions in monetary unions in that we solve a three-stage game, where the two national fiscal authorities do not play simultaneously. We find that there is always an incentive for the leader fiscal authority to play a three-stage game, which leaves the other fiscal authority worse off under demand shocks. This choice leads to more (less) volatile union-wide fiscal stance for demand (supply) shocks compared to the standard narrow-coordination case. This volatility is positively related to demand shocks' asymmetries. © 2017 Elsevier B.V. (EN)
English
https://creativecommons.org/licenses/by-nc/4.0/
University of Athens
Pergamos Digital Library
Journal Article



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