Monetary and Fiscal Strategies in the World Economy

This book studies the strategic interactions between monetary and fiscal policies in the world economy. The world economy consists of two regions, say Europe and America. The policy makers are the central banks and the governments. The policy targets are low inflation, low unemployment, and low structural deficits. There are demand shocks, supply shocks, and mixed shocks. There are regional shocks and common shocks. This book develops a series of basic, intermediate, and more advanced models. Here the focus is on the Nash equilibrium. The key questions are: Given a shock, can policy interactions reduce the existing loss? And to what extent can they do so? Another topical issue is policy cooperation. To illustrate all of this there are a lot of numerical examples. The present book is part of a larger research project on European Monetary Union, see the references given at the back of the book. Some parts of this project were presented at the World Congress of the International Economic Association, at the International Conference on Macroeconomic Analysis, at the International Institute of Public Finance, and at the International Atlantic Economic Conference. Other parts were presented at the Macro Study Group of the German Economic Association, at the Annual Meeting of the Austrian Economic Association, at the Göttingen Workshop on International Economics, at the Halle Workshop on Monetary Economics, at the Research Seminar on Macroeconomics in Freiburg, at the Research Seminar on Economics in Kassel, and at the Passau Workshop on International Economics. Front Matter....Pages I-XII Introduction....Pages 1-10 Front Matter....Pages 12-12 Monetary Policy....Pages 13-17 Fiscal Policy....Pages 18-22 Monetary and Fiscal Interaction....Pages 23-24 Monetary and Fiscal Cooperation....Pages 25-31 Front Matter....Pages 34-34 Fiscal Policy....Pages 35-40 Monetary and Fiscal Interaction....Pages 41-46 Monetary and Fiscal Cooperation....Pages 47-51 Front Matter....Pages 54-54 Monetary Interaction between Europe and America: Case A....Pages 55-67 Monetary Interaction between Europe and America: Case B....Pages 68-82 Monetary Interaction between Europe and America: Case C....Pages 83-91 Monetary Cooperation between Europe and America: Case A....Pages 92-93 Monetary Cooperation between Europe and America: Case B....Pages 94-95 Monetary Cooperation between Europe and America: Case C....Pages 96-97 Front Matter....Pages 100-100 Fiscal Interaction between Europe and America....Pages 101-112 Fiscal Cooperation between Europe and America....Pages 113-114 Front Matter....Pages 116-116 Fiscal Interaction between Europe and America....Pages 117-131 Fiscal Cooperation between Europe and America....Pages 132-137 Front Matter....Pages 140-140 Monetary and Fiscal Interaction between Europe and America....Pages 141-149 Monetary and Fiscal Cooperation between Europe and America....Pages 150-164 Front Matter....Pages 166-166 Monetary and Fiscal Interaction between Europe and America: Case A....Pages 167-184 Monetary and Fiscal Interaction between Europe and America: Case B....Pages 185-203 Monetary and Fiscal Interaction between Europe and America: Case C....Pages 204-216 Monetary and Fiscal Cooperation between Europe and America....Pages 217-232 Cooperation within Regions, Interaction between Regions....Pages 233-236 Back Matter....Pages 238-306