Fiscal federalism may not be a panacea in a monetary union if it does not address the non-cooperative behaviour between fiscal policymakers. To prove this, we assess the relative merits of a fiscal federalism scheme in a monetary union and intergovernmental fiscal cooperation without such a...

Objective: The objective of the article is to determine which exchange rate regime provides higher bilateral trade: fixed rate or currency union. Research Design & Methods: An index was designed based on variables commonly recognised as those that might affect the value of bilateral trade and...

We document stark asynchronicity across U.S. states, particularly across groups of states whose populations have voted consistently Democrat or consistently Republican in national elections; and we show that their risk-sharing channels differ substantially. However, we find that these groups of...

We analyze the political economy of monetary unification among countries with different quality of institutions. Countries with stronger institutions have lower public spending and better productive incentives, even under a stronger currency. Governments under weaker institutions spend more and...

This paper studies the design of the policy mix in a monetary union, that is, the institutional arrangement specifying the relationships between the various policymakers present in the union and the extent of their capacity of action. It is assumed that policymakers do not cooperate. Detailing...

This policy paper underscores the importance of credible currency regimes and their macroeconomic underpinnings for stability in financial systems and long-term economic convergence of developing and emerging market economies. It suggests that for developing regions such as Sub-Saharan Africa,...

We analyze the political economy of monetary unification among countries with different quality of institutions. Countries with stronger institutions have lower public spending and better investment incentives, even under a stronger currency. Governments under weaker institutions spend more so...