Monetary Unions: The Policy Coordination Issue

B. van Aarle (Belgium,The Netherlands), G. Di Bartolomeo (Belgium,Italy), J. Engwerda (The Netherlands), and J. Plasmans (Belgium,The Netherlands)


Macroeconomic stabilization, coalitions, LQ differential games.


In this paper we build a three-country dynamic model of a monetary union (MU), where we focus on how coalitions among policy-makers are formed and what are their effects on the stabilization of output and price. Some preliminary results based on numerical simulations are provided.

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