June 2018 issue contents
Should the ECB Coordinate EMU Fiscal Policies

by Tatiana Kirsanovaa, Celsa Machadob, and Ana Paula Ribeiroc


In a monetary union where fiscal authorities act strategically, fiscal cooperation is unlikely to emerge as an equilibrium. Even when the cooperative outcome is the best for a national fiscal authority, it is either not a Nash equilibrium or only one of several Nash equilibriums. The monetary authority may have an important coordinating role; however, the Paretopreferred equilibrium will not necessarily involve cooperation.

JEL Code: E52, E61, E63.

Full article (PDF, 44 pages, 1186 kb)

Online appendix (59 pages, 636 kb)

Discussion by Paolo A. Pesenti

a University of Glasgow
c University of Porto