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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

Labor Mobility Within Currency Unions

Farhi, Emmanuel - 2014

We study the effects of labor mobility within a currency union suffering from nominal rigidities. When the demand shortfall in depressed region is mostly internal, migration may not help regional macroeconomic adjustment. When external demand is also at the root of the problem, migration out of...

Persistent link: https://www.econbiz.de/10012458559

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