Designing the Policy Mix in a Monetary Union
26 Pages Posted: 5 Jun 2020
Date Written: 2020
Abstract
This paper studies the design of the policy mix in a monetary union, that is, the institutional arrangement specifying the relationships between the various policymakers present in the union and the extent of their capacity of action. It is assumed that policymakers do not cooperate. Detailing several institutional variants imposed on an otherwise standard macromodel of a monetary union, we prove that there is no Pareto-superior design when cooperation between policymakers is impossible.
Keywords: monetary union, fiscal policy, monetary policy, cooperation, policy mix
JEL Classification: E580, E620, F450, H760
Suggested Citation: Suggested Citation