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Federal fiscal transfers in monetary unions: A NOEM approach

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  • Michael Evers

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Abstract

In the debate over EMU, a widely accepted view is that a federal fiscal mechanism is needed for the participating states to cope with asymmetric shocks. In this paper, we explore the properties of federal fiscal transfer schemes with regard to their capability to stabilize national consumption, production and employment. We consider direct transfers among private sectors and indirect transfers among national fiscal authorities. We show that federal fiscal arrangements can provide perfect insurance. Our analysis builds on the New Open Economy Macroeconomics framework which allows us to portray the transmission of shocks and the properties of transfers in detail. Copyright Springer Science + Business Media, LLC 2006

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  • Michael Evers, 2006. "Federal fiscal transfers in monetary unions: A NOEM approach," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 13(4), pages 463-488, August.
    • Handle: RePEc:kap:itaxpf:v:13:y:2006:i:4:p:463-488
    DOI: 10.1007/s10797-006-8949-0
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Tervala, Juha, 2007. "Technology Shocks and Employment in Open Economies," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 1, pages 1-27.
    2. Philipp Wegmueller, 2014. "Floating or fixed exchange rates: The role of government size," Diskussionsschriften dp1404, Universitaet Bern, Departement Volkswirtschaft.
    3. Evers, Michael P., 2015. "Fiscal federalism and monetary unions: A quantitative assessment," Journal of International Economics, Elsevier, vol. 97(1), pages 59-75.
    4. Gadatsch, Niklas & Hollmayr, Josef & Stähler, Nikolai, 2016. "Thoughts on a fiscal union in EMU," Discussion Papers 40/2016, Deutsche Bundesbank.
    5. Etienne Farvaque & Florence Huart, 2017. "A policymaker’s guide to a Euro area stabilization fund," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 34(1), pages 11-30, April.
    6. Hubert Kempf, 2017. "Fiscal Federalism in a Monetary Union: The Cooperation Pitfall," CESifo Working Paper Series 6725, CESifo Group Munich.
    7. Angelo Baglioni & Andrea Boitani & Massimo Bordignon, 2016. "Labor Mobility and Fiscal Policy in a Currency Union," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 72(4), pages 371-406, December.
    8. Matthaei, Stephan & Stähler, Nikolai, 2016. "Macroeconomic implications of the German financial equalization system," Annual Conference 2016 (Augsburg): Demographic Change 145695, Verein für Socialpolitik / German Economic Association.
    9. 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.
    10. Verstegen, Loes & Meijdam, Lex, 2016. "The Effectiveness of a Fiscal Transfer Mechanism in a Monetary Union : A DSGE Model for the Euro Area," Discussion Paper 2016-023, Tilburg University, Center for Economic Research.
    11. Hubert Kempf, 2017. "Fiscal federalism in a monetary union: the cooperation pitfall," Working Papers 2017-14, Center for Research in Economics and Statistics.
    12. Evers, Michael P., 2012. "Federal fiscal transfer rules in monetary unions," European Economic Review, Elsevier, vol. 56(3), pages 507-525.
    13. Tervala, Juha, 2007. "Technology Shocks and Employment in Open Economies," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 1, pages 1-27.

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