[go: up one dir, main page]

  EconPapers    
Economics at your fingertips  
 

Uncertainty and fiscal policy in a monetary union: Why does monetary policy transmission matter?

Cornel Oros and Blandine Zimmer

Economic Modelling, 2015, vol. 50, issue C, 85-93

Abstract: In this paper, we develop a monetary-fiscal game in a monetary union with uncertainty due to imperfect transparency about the central bank's preferences. The objective is to investigate the macroeconomic effects of this uncertainty by explicitly taking into account the role of the monetary policy transmission mechanism. We first consider the case of symmetric monetary transmission in the monetary union and show that if the transmission mechanism is not too strong, monetary uncertainty may be beneficial in terms of macroeconomic performances and stabilisation. We then allow for some transmission asymmetry among the member countries and show that the beneficial impact of monetary uncertainty is exacerbated for countries that are more sensitive to the common monetary policy. More importantly, our findings suggest that the central bank's communication about its preferences could represent a specific instrument to influence inflation expectations and thus macroeconomic outcomes in the member countries.

Keywords: Central bank transparency; Monetary union; Fiscal policy (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0264999315001522
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Uncertainty and fiscal policy in a monetary union: Why does monetary policy transmission matter? (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:50:y:2015:i:c:p:85-93

DOI: 10.1016/j.econmod.2015.06.006

Access Statistics for this article

Economic Modelling is currently edited by S. Hall and P. Pauly

More articles in Economic Modelling from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2024-10-17
Handle: RePEc:eee:ecmode:v:50:y:2015:i:c:p:85-93