This paper examines the causal relationship between financial openness and financial stability in the West African Economic and Monetary Union (WAEMU) from 1993 to 2011. We use two indicators of financial openness: the de jure financial openness and the de facto financial openness. We propose a...

We analyze fiscal rules within a Monetary Union in the presence of (i) asymmetric information on member states' potential output and (ii) bail-out among member states. The first-best deficit is contingent on the cycle, that is, on member states' output gap. In the presence of asymmetric...