Fiscal Policy Coordination with Demand Spillovers and Unionised Labour Markets.
The authors explore the incentives for governments to cooperate by expanding expenditure. They have three countries: two are in a monetary union (the EMU). The labour markets of both the EMU countries are unionized and there is involuntary unemployment in equilibrium. The authors explore the intra- and intercountry effects of changes in bargaining power. They then examine optimal government expenditures in each EMU country; the authors find that there is a positive spillover and that expenditures are strategic complements. The coordinated equilibrium involves higher expenditure than the uncoordinated equilibrium. Copyright 1997 by Royal Economic Society.
Year of publication: |
1997
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Authors: | Dixon, Huw David ; Santoni, Michele |
Published in: |
Economic Journal. - Royal Economic Society - RES, ISSN 1468-0297. - Vol. 107.1997, 441, p. 403-17
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Publisher: |
Royal Economic Society - RES |
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