1. Subject and Approach.- 2. The Monetary Union of Two Countries: Basic Models.- 3. The Monetary Union of Two Countries: Intermediate Models.- One. The Monetary Union of Two Countries: Basic Models.- 1. Monetary Policy in the Union.- 1. The Model.- 2. Some Numerical Examples.- 2. Fiscal Competition between Germany and France.- 1. The Dynamic Model.- 2. Some Numerical Examples.- 2.1. Unemployment in Germany Equals Unemployment in France.- 2.2. Unemployment in Germany Exceeds Unemployment in France.- 2.3. Unemployment in Germany Exceeds Overemployment in France.- 2.4. Unemployment in Germany Equals Overemployment in France.- 3. Fiscal Cooperation between Germany and France.- 1. The Model.- 2. Some Numerical Examples.- 4. Competition between the Union Central Bank, the German Government, and the French Government.- 1. The Dynamic Model.- 2. Some Numerical Examples.- 2.1. Unemployment in Germany and France.- 2.2. Another Interpretation.- 2.3. Inflation in Germany and France.- 5. Cooperation between the Union Central Bank, the German Government, and the French Government.- 1. The Model.- 2. Some Numerical Examples.- 2.1. Unemployment in Germany and France.- 2.2. Inflation in Germany and France.- 6. Independent Central Bank, Fiscal Cooperation between Germany and France.- 1. Unemployment in Germany and France.- 1.1. The Model.- 1.2. Some Numerical Examples.- 2. Inflation in Germany and France.- 2.1. The Model.- 2.2. Some Numerical Examples.- 7. A Synopsis of the Basic Models.- Two. The Monetary Union of Two Countries: Intermediate Models.- 1. Fiscal Competition: A General Model.- 2. The Union Countries Differ in Size.- 1. Monetary Policy in the Union.- 2. Fiscal Competition between Germany and France.- 3. The Union Countries Differ in Behaviour.- 1. Monetary Policy in the Union.- 2. Fiscal Competition between Germany and France.- 4. Simultaneous and Independent Decisions.- 5. Gradualist Policies.- 6. Alternative Targets of the Union Central Bank.- 7. The German Government Targets Overemployment.- 8. No Spillovers of Fiscal Policy.- 1. Fiscal Competition between Germany and France.- 2. Competition between the Union Central Bank, the German Government, and the French Government.- 9. Positive Spillovers of Fiscal Policy.- 1. Fiscal Competition between Germany and France.- 2. Fiscal Cooperation between Germany and France.- 3. Competition between the Union Central Bank, the German Government, and the French Government.- 4. Independent Central Bank, Fiscal Cooperation between Germany and France.- Three. The Monetary Union of Two Countries: Advanced Models.- 1. Cold-Turkey Policies: Sequential Decisions.- 2. Cold-Turkey Policies: Simultaneous Decisions.- 1. The Dynamic Model.- 2. A Numerical Example.- 3. Gradualist Policies: Sequential Decisions.- 1. The Dynamic Model.- 2. A Numerical Example.- 4. Gradualist Policies: Simultaneous Decisions.- 1. The Dynamic Model.- 2. A Numerical Example.- 5. Monetary, Fiscal and Wage Competition.- 1. The Government Closes the Output Gap by 100 Percent, the Labour Union Closes the Output Gap by 100 Percent.- 2. The Government Closes the Output Gap by 40 Percent, the Labour Union Closes the Output Gap by 40 Percent.- 3. The Government Closes the Output Gap by 20 Percent, the Labour Union Closes the Output Gap by 60 Percent.- 4. The Government Closes the Output Gap by 60 Percent, the Labour Union Closes the Output Gap by 60 Percent.- 5. The Government Closes the Output Gap by 40 Percent, the Labour Union Closes the Output Gap by 80 Percent.- Four. The Monetary Union of n Countries.- 1. The Monetary Union of Three Countries.- 1. Monetary Policy in the Union.- 2. Fiscal Competition between Germany, France and Italy.- 3. Fiscal Cooperation between Germany, France and Italy.- 4. Monetary and Fiscal Competition.- 5. Independent Central Bank, Fiscal Cooperation between Germany, France and Italy.- 2. The Monetary Union of Four Countries.- Five. Rational Policy Expectations.- 1. Rational Policy Expectations in Germany and France.- 1. Fiscal Competition between Germany and France.- 2. Competition between the Union Central Bank, the German Government, and the French Government.- 3. Independent Central Bank, Fiscal Competition between Germany and France.- 2. Adaptive Policy Expectations in Germany and France.- 3. Adaptive Policy Expectations in Germany, Rational Policy Expectations in France.- Conclusion.- 1. The Monetary Union of Two Countries: Basic Models.- 1.1. Monetary Policy in the Union.- 1.2. Fiscal Competition between Germany and France.- 1.3. Fiscal Cooperation between Germany and France.- 1.4. Competition between the Union Central Bank, the German Government, and the French Government.- 1.5. Cooperation between the Union Central Bank, the German Government, and the French Government.- 1.6. Independent Central Bank, Fiscal Cooperation between Germany and France.- 2. The Monetary Union of Two Countries: Intermediate Models.- 3. The Monetary Union of Two Countries: Advanced Models.- 4. The Monetary Union of Three Countries.- 5. Rational Policy Expectations.- Result.- 1. Monetary Policy in the Union.- 2. Fiscal Competition between Germany and France.- 3. Fiscal Cooperation between Germany and France.- 4. Competition between the Union Central Bank, the German Government, and the French Government.- 5. Cooperation between the Union Central Bank, the German Government, and the French Government.- 6. Independent Central Bank, Fiscal Cooperation between Germany and France.- Symbols.- A Brief Survey of the Literature.- The Current Research Project.- References.