This paper explores the fiscal devaluation hypothesis in a model of a monetary union characterised by national fiscal policies and supranational monetary policy. We show that a unilateral tax shift towards indirect taxes in one of the countries produces small but non-negligible long run effects...

With the advent of the economic and monetary union in the European Union (EU), the economic landscape of the EU will bear a striking resemblance to that of the United States in terms of fundamental attributes such as the freedom of internal movements of individuals, capital, and goods within the...

There is little doubt that the step towards a monetary union in Europe will increase both the distortionary effects of existing differences in national tax systems and the intensity of tax competition for internationally mobile commodity and factor tax bases. This paper discusses selected issues...