Insulation impossible
Subtitle: fiscal spillovers in a monetary union
By: Russell Cooper, Hubert Kempf, Dan Peled.
Contributors: Kempf, Hubert, agrégé de science économique.; Peled, Dan.; National Bureau of Economic Research.
Series: NBER working paper series -- working paper 15176; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 15176.
Publisher: National Bureau of Economic Research
Published: 2009
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Description: "This paper studies the effects of monetary policy rules in a monetary union.  The focus of the analysis is on the interaction between the fiscal policy of member countries (regions) and the central monetary authority.  When capital markets are integrated, the fiscal policy of one country will influence equilibrium wages and interest rates.  Thus there are fiscal spillovers within a federation.  The magnitude and direction of these spillovers, in particular the presence of a crowding out effect, can be influenced by the choice of monetary policy rules.  We find that there does not exist a monetary policy rule which completely insulates agents in one region from fiscal policy in another.  Some familiar policy rules, such as pegging an interest rate, can provide partial insulation"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 8/14/2009.

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