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Désajustements de change, fédéralisme budgétaire et redistribution : comment s’ajuster en union monétaire
[Exchange Rate Misalignments, Fiscal Federalism and Redistribution: How to Adjust in a Monetary Union]

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  • Duwicquet, Vincent
  • Mazier, Jacques
  • Saadaoui, Jamel

Abstract

The euro zone crisis illustrates the insufficiency of adjustment mechanisms in a monetary union characterized by a large heterogeneity. Firstly, the paper gives an evaluation of exchange rate misalignments inside the euro zone, using a FEER approach (Jeong, Mazier and Saadaoui, 2010). Using panel econometric techniques over the period 1994-2010, we confirm that the exchange rate misalignments in the euro zone have diverged, reflecting unsustainable evolutions. Secondly, we use a “stock-flow consistent” model of a monetary union with two countries along the lines of Godley and Lavoie (2007) and Duwicquet and Mazier (2010). A federal budget is introduced with federal expenditures and social transfers financed by federal taxes and euro-bonds issuing. The stabilizing role of such a federal budget is confirmed facing asymmetric shock or the negative impact of exchange rate misalignments inside the monetary union. Similarly, the stabilizing role of euro-bonds used to finance European investment projects is illustrated.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 42858.

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Date of creation: 26 Nov 2012
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Handle: RePEc:pra:mprapa:42858

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Keywords: Désajustements de taux de change; ajustements; union monétaire; crise de la zone euro;

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