Colciago, Andrea; Ropele, Tiziano; Muscatelli, V. Anton; … - In: Review of International Economics 16 (2008) 3, pp. 591-610
We assess the role of national fiscal policies, as automatic stabilizers, within a monetary union. We use a two-country New Keynesian DSGE model, incorporating non-Ricardian consumers and a home bias in national consumption. Fiscal policy directly stabilizes non-Ricardian agents' consumption. By...