
Fiscal Consolidation: An Exercise in the Methodology of Coordination
Fiscal Consolidation: An Exercise in the Methodology of Coordination
- Guglielmo Maria Caporale Michael Chui Stephen G. Hall Brian Henry
- 세종대학교 경제통합연구소
- Journal of Economic Integration
- 제20권 제1호
- 등재여부 : KCI등재
- 2005.03
- 1 - 25 (25 pages)
This paper outlines a new methodology for the study of international policy coordination, which builds on two separate approaches previously used in the literature: optimal simple rules, and game-theoretic analysis. The new approach is illustrated by using the example of a changed target for the debt-income ratio in the G-3. The results suggest that there are few policy externalities when only fiscal policy is coordinated, whilst coordination of both fiscal and monetary policy results in substantial externalities and welfare improvements. Our findings reflect the fact that, unlike earlier studies, we focus on the strategic interaction between (domestic) policy makers, as well as the standard exchange rate and interest rate transmission mechanisms.
Ⅰ. Introduction
Ⅱ. A Model of the G3 Economies
Ⅲ. Analysing Fiscal Shocks in International Models
Ⅳ. Fiscal Policy Coordination
Ⅴ. Conclusions