Similar Search Results

Coordination and Crisis in Monetary Unions

Aguiar, Mark - 2014

We characterize fiscal and monetary policy in a monetary union with the potential for rollover crises in sovereign debt markets. Member-country fiscal authorities lack commitment to repay their debt and choose fiscal policy independently. A common monetary authority chooses inflation for the...

Persistent link: https://www.econbiz.de/10012458389

A Model of the Safe Asset Mechanism (SAM) : Safety Traps and Economic Policy

Caballero, Ricardo J. - 2013

The global economy has a chronic shortage of safe assets which lies behind many recent macroeconomic imbalances. This paper provides a simple model of the Safe Asset Mechanism (SAM), its recessionary safety traps, and its policy antidotes. Safety traps share many common features with...

Persistent link: https://www.econbiz.de/10012459925

Fiscal Multipliers : Liquidity Traps and Currency Unions

Farhi, Emmanuel - 2012

We provide explicit solutions for government spending multipliers during a liquidity trap and within a fixed exchange regime using standard closed and open-economy models. We confirm the potential for large multipliers during liquidity traps. For a currency union, we show that self-financed...

Persistent link: https://www.econbiz.de/10012460278

Fiscal Unions

Werning, Ivan - 2012

We study cross-country risk sharing as a second-best problem for members of a currency union using an open economy … value of gaining access to any given level of aggregate risk sharing is greater for countries that are members of a currency … union. Second, we show that even if financial markets are complete, privately optimal risk sharing is constrained …

Persistent link: https://www.econbiz.de/10012460383

Fiscal Devaluations

Farhi, Emmanuel - 2011

We show that even when the exchange rate cannot be devalued, a small set of conventional fiscal instruments can robustly replicate the real allocations attained under a nominal exchange rate devaluation in a dynamic New Keynesian open economy environment. We perform the analysis under...

Persistent link: https://www.econbiz.de/10012460995