FISCAL POLICY COOPERATION IN EMU: LITERATURE REVIEW
FISCAL POLICY COOPERATION IN EMU: LITERATURE REVIEW

Summary/Abstract: Article deals with the movement toward closer macroeconomic policies cooperation within the EMU area. As the monetary policy is given for all Euro-zone countries and managed by one player (ECB), real space for stipulating economic growth is given in coordination of fiscal policies. Key question examined in the article is how fiscal authorities should behave in order to maximize output stabilization and to speed up convergence effort among EMU countries. The article reviews theoretical approaches explaining rationality of fiscal authorities’ cooperation in the EMU area. Methodologically, the article is based on the literature and theoretical approaches review presented by well-known and widely accepted authors published in last decade in order to prepare concept of the model based on game theory examining whether cooperative or non-cooperative behavior in the field of fiscal policy is more suitable in order to increase the expected benefits of the game.

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