Monetary Union and Fiscal Federalism
AbstractDoes a monetary union need fiscal shock absorbers helping the participating countries to cope with asymmetric shocks? The consensus in the debate over EMU argues that the answer is yes. In this paper, we revisit the issue, building on a dynamic, general equilibrium framework of regions in a monetary union exposed to asymmetric shocks. We show that inter-regional taxes and transfers can stabilize regional employment or consumption, but not both. The welfare effects of such a stabilization are, however, ambiguous. In contrast to a popular argument in the EMU debate, inter-regional taxes and transfers do not reduce the incentives for goods and labour market deregulation in the regions, provided that the degree of trade integration among the regions is large. There is, however, reason to coordinate regional reform policies to avoid adverse effects on the aggregate performance of the union.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2615.
Date of creation: Nov 2000
Date of revision:
Contact details of provider:
Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
Other versions of this item:
- E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
- E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
- F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- István Benczes, 2001. "Stability Pact for Hungary? Rise of Third Generation Reforms," CERT Discussion Papers 0103, Centre for Economic Reform and Transformation, Heriot Watt University.
- Ralf Hepp & JÃ¼rgen von Hagen, 2009.
"Fiscal Federalism in Germany: Stabilization and Redistribution Before and After Unification,"
Fordham Economics Discussion Paper Series
dp2009-06, Fordham University, Department of Economics.
- Ralf Hepp & Jürgen von Hagen, 2012. "Fiscal Federalism in Germany: Stabilization and Redistribution Before and After Unification," Publius: The Journal of Federalism, Oxford University Press, vol. 42(2), pages 234-259, April.
- Hepp, Ralf & von Hagen, Jürgen, 2009. "Fiscal Federalism in Germany: Stabilization and Redistribution Before and After Unification," CEPR Discussion Papers 7246, C.E.P.R. Discussion Papers.
- Hepp, Ralf & von Hagen, Jürgen, 2010. "Fiscal federalism in Germany: Stabilization and redistribution before and after unification," ZEI Working Papers B 02-2010, ZEI - Center for European Integration Studies, University of Bonn.
- Hepp, Ralf & von Hagen, Jürgen, 2009. "Fiscal federalism in Germany: Stabilization and redistribution before and after unification," ZEI Working Papers B 01-2009, ZEI - Center for European Integration Studies, University of Bonn.
- Tomasz Michalak & Jacob Engwerda & Joseph Plasmans, 2009. "Strategic Interactions between Fiscal and Monetary Authorities in a Multi-Country New-Keynesian Model of a Monetary Union," CESifo Working Paper Series 2534, CESifo Group Munich.
- Geradin, D.A.A.G. & McCahery, J.A., 2005. "Regularory co-opetition: Transcending the regulatory competition debate," Discussion Paper 2005-020, Tilburg University, Tilburg Law and Economic Center.
- Ansgar Belke & Frank Baumgärtner, 2002.
"Fiskalische Transfermechanismen und asymmetrische Schocks in Euroland,"
Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research,
DIW Berlin, German Institute for Economic Research, vol. 71(3), pages 384-399.
- Ansgar Belke & Frank Baumgärtner, 2002. "Fiskalische Transfermechanismen und asymmetrische Schocks in Euroland," Diskussionspapiere aus dem Institut fÃ¼r Volkswirtschaftslehre der UniversitÃ¤t Hohenheim 209/2002, Department of Economics, University of Hohenheim, Germany.
- Uhlig, H.F.H.V.S., 2002.
"One Money, But Many Fiscal Policies in Europe: What are the Consequences?,"
2002-32, Tilburg University, Center for Economic Research.
- Uhlig, Harald, 2002. "One Money, but Many Fiscal Policies in Europe: What Are the Consequences?," CEPR Discussion Papers 3296, C.E.P.R. Discussion Papers.
- Kenneth Kletzer, 2006. "Taxes and stabilization in contemporary macroeconomic models," International Tax and Public Finance, Springer, vol. 13(4), pages 351-371, August.
- Charles Wyplosz, 2002. "Fiscal Policy: Institutions vs. Rules," IHEID Working Papers 03-2002, Economics Section, The Graduate Institute of International Studies.
- Sanguinetti, Pablo & Tommasi, Mariano, 2004.
"Intergovernmental transfers and fiscal behavior insurance versus aggregate discipline,"
Journal of International Economics,
Elsevier, vol. 62(1), pages 149-170, January.
- Mariano Tommasi & Pablo Sanguinetti, 2003. "Intergovernmental Transfers and Fiscal Behavior: Insurance versus Aggregate Discipline," Working Papers 60, Universidad de San Andres, Departamento de Economia, revised Aug 2003.
- Thomas Uril, 2001. "Avoiding excessive deficits with fiscal coordination light," Intereconomics: Review of European Economic Policy, Springer, vol. 36(6), pages 281-285, November.
- Bird, Richard M. & Smart, Michael, 2002. "Intergovernmental Fiscal Transfers: International Lessons for Developing Countries," World Development, Elsevier, vol. 30(6), pages 899-912, June.
- Isidoro Mazza & Frans Winden, 2002. "Does Centralization Increase the Size of Government? The Effects of Separation of Powers and Lobbying," International Tax and Public Finance, Springer, vol. 9(4), pages 379-389, August.
- Shah, Anwar, 2005. "Fiscal decentralization and fiscal performance," Policy Research Working Paper Series 3786, The World Bank.
- Michael Evers, 2006. "Federal fiscal transfers in monetary unions: A NOEM approach," International Tax and Public Finance, Springer, vol. 13(4), pages 463-488, August.
- Eduard Hochreiter & Anton Korinek & Pierre L. Siklos, 2003. "The potential consequences of alternative exchange rate regimes: A study of three candidate regions," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 8(4), pages 327-349.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.