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We analyze causes and consequences of a monetary unification among countries with different institutional quality. Countries with stronger institutions choose a more productive policy, resulting in a stronger currency and lower taxes. Governments under weaker institutions prefer more spending...
Persistent link: https://www.econbiz.de/10014081954
Persistent link: https://www.econbiz.de/10012592545
There is evidence for a strong demand for safety, both steady and inelastic. A sudden loss of safe assets played a key role in the financial crisis and European sovereign debt crisis. I show that a common fiscal policy can benefit all member states of a monetary union by offering a more...
Persistent link: https://www.econbiz.de/10013307024
We analyze the political economy causes and consequences of a monetary unification among countries with different institutional quality. Before a common currency, countries with stronger institutions have more efficient public spending and lower taxes, leading to better productive incentives and...
Persistent link: https://www.econbiz.de/10013311768