Monetary union breakthrough: Ideal economic levels achieved without coordination.
The article explores how monetary and fiscal policies interact in a monetary union. By using a model that considers multiple countries and their fiscal policies, the researchers found that if policymakers agree on ideal levels of output and inflation, these goals can be achieved even with disagreements on objectives. Despite challenges like fiscal profligacy and lack of coordination, the ideal outcomes can still be reached without specific commitments from either monetary or fiscal authorities.