Should fiscal authorities cooperate in a monetary union with public deficit targets?

Identificador:  PC:2040

Handle: https://hdl.handle.net/20.500.11797/PC2040

Autors:  Ferré Carracedo, Montserrat

Resum:
In this paper we analyse the setting of optimal policies in a monetary union with one monetary authority and various fiscal authorities that have a public deficit target. We will show that fiscal cooperation among the fiscal authorities, in the presence of positive supply shocks, ends up producing higher public deficits than in a non-cooperative regime. JEL No. E61, E63, F33, H0. Keywords: monetary union, fiscal policy coordination.