The provisions of the German financial equalization system (Länderfinanzausgleich), a specific form of a fiscal union among the federal states (Länder), will expire in 2019. In this paper, we assess the effects of the system as well as of reform proposals on key macroeconomic variables and...

We discuss how cross-country unemployment insurance can be used to improve international risk sharing. We use a two-country business cycle model with incomplete financial markets and frictional labor markets where the unemployment insurance scheme operates across both countries. Cross-country...

Using an estimated large-scale New-Keynesian model, we assess welfare and business cycle consequences of a fiscal union within EMU. We differentiate between three different scenarios: public revenue equalisation, tax harmonisation and a centralised fiscal authority. Relative to the status quo,...

En este trabajo se analizan los efectos sobre la actividad económica derivados de mantener un nivel elevado de deuda pública por medio de simulaciones realizadas con modelos de equilibrio general dinámico estocástico (DSGE, por sus siglas en inglés). La fuerte acumulación de deuda pública...

Summary Employment protection affects labour market outcomes and hence the incentive to acquire skills. Using a matching model with two education levels in which workers decide ex-ante on their skill formation, it is shown that employment protection can raise the fraction of skilled workers....