Chapter 1 Monetary and Fiscal Interaction: Closing the Gaps by 50 Percent
1) The static model. The world economy consists of two monetary regions, say Europe and America. The monetary regions are the same size and have the same behavioural functions. The target of the European central bank is zero inflation in Europe. The target of the American central bank is zero inflation in America. The target of the European government is zero unemployment in Europe. And the target of the American government is zero unemployment in America.
KeywordsMonetary Policy Central Bank Fiscal Policy Money Supply European Central Bank
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