We explore the incentives for governments to cooperate by expanding expenditure. We have three countries: two are in a monetary union (the EMU). The labour markets of both the EMU countries are unionised, and there is involuntary unemployment in equilibrium. We explore the intra and intercountry effects of changes in bargaining power. We then examine optimal government expenditures in each EMU country; we find that there is a positive spillover, and that expenditures are strategic complements. The coordinated equilibrium involves higher expenditure than the uncoordinated equilibrium. © Royal Economic Society 1997.

Fiscal policy coordination with demand spillovers and unionised labour markets / H.D. Dixon, M. Santoni. - In: ECONOMIC JOURNAL. - ISSN 0013-0133. - 107:441(1997 Mar 01), pp. 403-417. [10.1111/j.0013-0133.1997.166.x]

Fiscal policy coordination with demand spillovers and unionised labour markets

M. Santoni
Ultimo
1997

Abstract

We explore the incentives for governments to cooperate by expanding expenditure. We have three countries: two are in a monetary union (the EMU). The labour markets of both the EMU countries are unionised, and there is involuntary unemployment in equilibrium. We explore the intra and intercountry effects of changes in bargaining power. We then examine optimal government expenditures in each EMU country; we find that there is a positive spillover, and that expenditures are strategic complements. The coordinated equilibrium involves higher expenditure than the uncoordinated equilibrium. © Royal Economic Society 1997.
Fiscal policy coordination, public good provision, trade unions;
Settore SECS-P/03 - Scienza delle Finanze
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/2434/892291
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