Financial integration and macroeconomic adjustments in a monetary union
AbstractIn a monetary union, such as the euro zone, adjustments facing asymmetric evolutions are more difficult due to fixed intra-European exchange rates. Well-integrated capital markets, with portfolio diversification and intrazone credit, would constitute a powerful adjustment mechanism, according to the "international risk-sharing" approach. A different approach is adopted, based on a "stock-flow consistent" model of a monetary union along the lines of Godley and Lavoie (2007). Two results can be underlined. Holding foreign assets has a stabilizing role, but the capital income stabilizing coefficient seems small. By contrast, intrazone credit seems to have no specific stabilization effects.
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Bibliographic InfoArticle provided by M.E. Sharpe, Inc. in its journal Journal of Post Keynesian Economics.
Volume (Year): 33 (2010)
Issue (Month): 2 (January)
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Web page: http://mesharpe.metapress.com/link.asp?target=journal&id=109348
international finance; open economy macroeconomics; Post Keynesian modeling;
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- Duwicquet, Vincent & Mazier, Jacques & Saadaoui, Jamel, 2012.
"Désajustements de change, fédéralisme budgétaire et redistribution : comment s’ajuster en union monétaire
[Exchange Rate Misalignments, Fiscal Federalism and Redistribution: How to Adjust in," MPRA Paper 42858, University Library of Munich, Germany.
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[Global Imbalances, Equilibrium Exchange Rates and Stock-Flow Consistent Modelling]," MPRA Paper 51332, University Library of Munich, Germany.
- Eugenio Caverzasi & Antoine Godin, 2013. "Stock-flow Consistent Modeling through the Ages," Economics Working Paper Archive wp_745, Levy Economics Institute.
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