Optimal monetary and fiscal policy in a currency union with nontradables

被引:2
作者
Okano, Eiji [1 ]
机构
[1] Chiba Keizai Univ, Fac Econ, Chiba, Japan
基金
日本学术振兴会;
关键词
currency union; DSGE; Balassa-Samuelson theorem; optimal monetary policy; monetary and fiscal policy mix;
D O I
10.1080/17520840903498081
中图分类号
F [经济];
学科分类号
02 ;
摘要
By constructing a dynamic stochastic general equilibrium (DSGE) model, this paper verifies the necessity for an optimal monetary and fiscal policy under a currency union with non-tradable goods. An optimal monetary policy alone can maximize social welfare through stabilizing the producer price inflation and output gap in each country simultaneously when all goods are tradable. However, a solitary optimal monetary policy cannot maximize social welfare because of the Balassa-Samuelson Theorem when non-tradable goods exist. In this case, a cooperative optimal monetary and fiscal policy maximizes social welfare. Also, self-oriented fiscal authority can replicate optimal allocation similar to a cooperative setting.
引用
收藏
页码:1 / 23
页数:23
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