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The distributional and disruptive effects of energy supply shocks are potentially large. We study the effectiveness of … alternative fiscal responses in a two-country HANK model that we calibrate to the euro area. Energy subsidies can stabilize the … subsidizing country gains, the other countries lose. Transfers based on historical energy consumption in the form of a Hicks …
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Two seemingly unconnected empirical results suggest an intriguing mechanism. First, economic integration helps harmonize prices internationally, with trade being the primary channel (Rogoff 1996, Goldberg and Knetter 1997). Second, monetary union may greatly increase the amount of trade among...
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