This book studies the interactions between monetary and fiscal policies in a world economy. Here the focus is on a dynamic analysis. The world economy consists of two monetary regions, say Europe and America. The policy makers are the European central bank, the American central bank, the European government, and the American government. The central banks are independent. There is a short-run trade-off between unemployment and inflation. In other words, there is a short-run Phillips curve.
KeywordsMonetary Policy Central Bank Fiscal Policy Money Supply European Central Bank
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