Regional Nonadjustment and Fiscal Policy: Lessons for EMU
AbstractHow will countries handle idiosyncratic national macroeconomic shocks under the European single currency? The ways in which European countries now react to internally asymmetric shocks provide a better forecast than do the regional response patterns of the United States. In this paper we compare the US with Germany, Italy, the United Kingdom, and also with Canada, which is closer to Europe than the US is in its labor market and fiscal institutions. Europe's ( and to some extent Canada's) model of regional response differs from that of the US. Changes in relative regional real exchange rates are generally small. Outside of the US, however, there is more reliance on interregional transfer payments, less on labor migration, and the pace of regional adjustment appears slower. The regional adjustment patterns currently prevailing within European currency unions--characterized by limited labor mobility and price inflexibility--seem likely to prevail at the national level under the single currency. If EMU aims to attain the economic and social cohesion of its constituent nations, it therefore may be hard to resist the eventual extension of existing EU mechanisms of income redistribution--a transfer union. We propose an alternative strategy based on a relaxed stability pact, further strictures against central EU borrowing, labor market and fiscal reform, and the issuance by individual member states of debt indexed to nominal GDP.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoPaper provided by University of California at Berkeley in its series Center for International and Development Economics Research (CIDER) Working Papers with number C98-096.
Date of creation: 01 Mar 1998
Date of revision:
Contact details of provider:
Postal: University of California at Berkeley, Berkeley, CA USA
Web page: http://www.haas.berkeley.edu/groups/iber/wps/ciderwp.htm
More information through EDIRC
Postal: IBER, F502 Haas Building, University of California at Berkeley, Berkeley CA 94720-1922
Other versions of this item:
- Maurice Obstfeld & Giovanni Peri, 1999. "Regional Nonadjustment and Fiscal Policy: Lessons for EMU," NBER Working Papers 6431, National Bureau of Economic Research, Inc.
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
- J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Chamon, Marcos & Mauro, Paolo, 2006.
"Pricing growth-indexed bonds,"
Journal of Banking & Finance,
Elsevier, vol. 30(12), pages 3349-3366, December.
- Glauben, Thomas & Loy, Jens-Peter & Meyer, Jochen, 2004. "Does Money Illusion Matter? The Impact Of Euro On The Vertical Transmission Of Food Price In Germany," 2004 Annual meeting, August 1-4, Denver, CO 20104, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- Glauben, Thomas & Loy, Jens-Peter & Meyer, Jochen, 2005. "The Impact of Euro Introduction on the Vertical Price Transmission in the German Food Market - Does Money Illusion Matter?," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24634, European Association of Agricultural Economists.
- Michael B. Devereux & Charles Engel & CÈdric Tille, 2003.
"Exchange Rate Pass-Through and the Welfare Effects of the Euro,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(1), pages 223-242, February.
- Michael B. Devereux & Charles Engel & Cedric Tille, 1999. "Exchange Rate Pass-Through and the Welfare Effects of the Euro," NBER Working Papers 7382, National Bureau of Economic Research, Inc.
- Michael Devereux & Charles Engel & Cedric Tille, 1999. "Exchange-Rate Pass-Through and the Welfare Effects of the Euro," Working Papers 0034, University of Washington, Department of Economics.
- Michael Devereux & Charles Engel & Cedric Tille, 1999. "Exchange-Rate Pass-Through and the Welfare Effects of the Euro," Discussion Papers in Economics at the University of Washington 0034, Department of Economics at the University of Washington.
- Melitz, Jacques & Zumer, Frederic, 2002. "Regional redistribution and stabilization by the center in Canada, France, the UK and the US:: A reassessment and new tests," Journal of Public Economics, Elsevier, vol. 86(2), pages 263-286, November.
- Forni, Mario & Reichlin, Lucrezia, 2001.
"Federal policies and local economies: Europe and the US,"
European Economic Review,
Elsevier, vol. 45(1), pages 109-134, January.
- Mario Forni & Lucrezia Reichlin, 2001. "Federal policies and local economies: Europe and the U.S," ULB Institutional Repository 2013/10141, ULB -- Universite Libre de Bruxelles.
- World Bank, 2012. "In Search of Opportunities : How a More Mobile Workforce Can Propel Ukraine’s Prosperity (Vol. 2 of 2) : Technical Report," World Bank Other Operational Studies 12287, The World Bank.
- Mario Forni & Lucrezia Reichlin, 1999.
"Risk and potential insurance in Europe,"
ULB Institutional Repository
2013/10145, ULB -- Universite Libre de Bruxelles.
- Lafrance, Robert & St-Amant, Pierre, 2000. "Les zones monétaires optimales," L'Actualité Economique, Société Canadienne de Science Economique, vol. 76(4), pages 577-612, dÃ©cembre.
- Zahir, Antia & Djoudad, Ramdane & St-Amant, Pierre, 1999. "Canada’s Exchange Rate Regime and North American Economic Integration: The Role of Risk-Sharing Mechanisms," Working Papers 99-17, Bank of Canada.
- Gabor Kezdi, 2002. "The Geographic Mobility of Labor and the Rigidity of European Labor Markets," IEHAS Discussion Papers 0216, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
- J¨¹rgen Roth & Simon G. Fauser, 2011. "Reaction Patterns of German Regional Labour Markets to Macroeconomic and Policy-induced Shocks¡ª A Comparative Analysis," Review of Economics & Finance, Better Advances Press, Canada, vol. 1, pages 87-103, February.
- Gerald A. Carlino & Robert DeFina, 1998. "Monetary policy and the U.S. and regions: some implications for European Monetary Union," Working Papers 98-17, Federal Reserve Bank of Philadelphia.
- Frédéric Zumer & Jacques Mélitz*, 2002.
"Partage du risque dans l'Union européenne. Expériences interrégionales et internationales,"
Revue de l'OFCE,
Presses de Sciences-Po, vol. 0(5), pages 299-323.
- Jacques Mélitz & Frédéric Zumer, 2002. "Partage du risque dans l'Union européenne : expériences interrégionales et internationales," Sciences Po publications info:hdl:2441/762, Sciences Po.
- Niebuhr, Annekatrin, 2002. "Spatial dependence of regional unemployment in the European Union," HWWA Discussion Papers 186, Hamburg Institute of International Economics (HWWA).
- Ramos, Raul & Clar, Miquel & Surinach, Jordi, 1999. "EMU: some unanswered questions," ERSA conference papers ersa99pa220, European Regional Science Association.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum).
If references are entirely missing, you can add them using this form.