Abstract: This contribution illustrates the logic of demand coordination in a regionally integrated area using cross-country demand multipliers between three separate geographical regions. It completes an argument elegantly put forward by Muet (2004). The results show that the fiscal policy multiplier with coordination is lower than the closed economy multiplier but higher than the multiplier without policy coordination. The theoretical argument in favor of policy coordination is then illustrated using an example of regional connectivity infrastructure investment in the Western Balkans.
