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Overturning Mundell: Fiscal Policy in a Monetary Union

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  • Russell Cooper
  • Hubert Kempf

Abstract

Central to ongoing debates over the desirability of monetary unions is a supposed trade-off, outlined by Mundell (1961): a monetary union reduces transactions costs but renders stabilization policy less effective. If shocks across countries are sufficiently correlated, then, according to this argument, delegating monetary policy to a single central bank is not very costly and a monetary union is desirable. Copyright The Review of Economic Studies Limited, 2004.

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Article provided by Wiley Blackwell in its journal Review of Economic Studies.

Volume (Year): 71 (2004)
Issue (Month): 2 (04)
Pages: 371-396

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Handle: RePEc:bla:restud:v:71:y:2004:i:2:p:371-396

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  1. Aizenman, Joshua & Powell, Andrew, 1998. "The political economy of public savings and the role of capital mobility," Journal of Development Economics, Elsevier, vol. 57(1), pages 67-95, October.
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