This paper describes the institutional flaws that led to the euro crisis, assesses the institutional reforms that were put in place during and in the aftermath of the crisis, and evaluates the remaining fragilities of the architecture of the European monetary union. In mid-2017, growth in the...

We use a two-country model with a central bank maximizing union-wide welfare and two fiscal authorities minimizing comparable, but slightly different country-wide losses. We analyze the rivalry between the three authorities in seven static games. Comparing a homogeneous with a heterogeneous...

We analyze the role of fiscal policy and intra-European trade in business cycle synchronization in the EU for the period 1995-2008. There is a broad consensus that the relationship between fiscal policy and business cycle comovements and between trade integration and cyclical synchronization are...

The aim of the paper is to analyse the Stability and Growth Pact of EMU in a two-country model of monetary union with rational expectations and with spillovers of macroeconomic policies between the countries. The paper concentrates on tax policy, and shows that the results on optimal policy...

In light of persistent in ation dispersion and rising debt levels in the EMU, this paper investigates the welfare implications of budget-neutral scal policies that counteract in ation di erentials. In a two-country DSGE model of a monetary union with traded and non-traded goods a national scal...