Short and medium run effects of fiscal policy in an economic and monetary union : the case of a small country

Authors

  • Michał Konopczyński

DOI:

https://doi.org/10.18559/ebr.2012.4.856

Keywords:

Currency unions, Economic models, Competition, Budget deficit, Financial crisis, Unie walutowe, Modele ekonomiczne, Konkurencja, Deficyt budżetowy, Kryzys finansowy

Abstract

We analyze the effectiveness of fiscal policy in an economic and monetary union. On the basis of a simple static and dynamic Mundell-Fleming model, we show that expansionary fiscal policy is very effective in the short run, but in the medium run all positive effects are "exported" abroad due to impaired competitiveness. These results are illustrated by numerical simulations. High short-run effectiveness of fiscal policy may have contributed to excessive deficits in many EMU countries. (original abstract)

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Published

2012-12-30

How to Cite

Konopczyński, M. (2012). Short and medium run effects of fiscal policy in an economic and monetary union : the case of a small country. Economics and Business Review, 12(4), 28–50. https://doi.org/10.18559/ebr.2012.4.856

Issue

Vol. 12 No. 4 (2012)

Section

Research article- regular issue

License

Copyright (c) 2012 Poznań University of Economics and Business

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.