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Journal of Economic Integration 2011 June;26(2) :361-385.
Monetary and Fiscal Policy in the EMU : Conflict or Coordination?

Séverine Menguy 

Universite de Paris-Ouesté-Nanterre -La Defense
Copyright ©2011 Journal of Economic Integration

The common central bank of a monetary union tends to lead a more accommodative monetary policy in order to avoid the default of the moderately indebted member countries whereas the most hardly indebted countries have to default. The optimal inflation rate increases the more numerous are the highly indebted countries in the union, the higher are the interest rates on the risk free capital and the smaller are the interest rates on nominal bonds in the fiscally weak countries. This study considers conflict and coordination between integrated public.

JEL Classification: E63, H63, H77, H87

Keywords: Monetary Policy | Monetary Union | Public Debt | Inflation Rate
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