Abstract The paper investigates the impact of automatic horizontal fiscal transfers on risk sharing and consumption smoothing in a 2-country DSGE model of monetary union. In particular, it uses the Asdrubali et al. (1996) approach to quantify and decompose the strength of consumption...

The German federal government's fiscal consolidation package, announced in June, is designed to permanently reduce the federal deficit to a new target level. This article uses a three-region version of the European Commission's QUEST model to gauge the impact of the package on Germany and the...