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Time inconsistency and free-riding in a monetary union

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Time inconsistency and free-riding in a monetary union

Chari, Varadarajan V.; Kehoe, Patrick J. - 2002

"We analyze the setting of monetary and nonmonetary policies in monetary unions. We show that in these unions a time inconsistency problem in monetary policy leads to a novel type of free-rider problem in the setting of nonmonetary policies, such as labor market policy, fiscal policy, and bank...