A Volatility-based Theory of Fiscal Union Formation

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dc.contributor.author LUQUE, Jaime
dc.contributor.author MORELLI, Massimo
dc.contributor.author TAVARES, José
dc.date.accessioned 2012-05-17T09:45:57Z
dc.date.available 2012-05-17T09:45:57Z
dc.date.issued 2012
dc.identifier.issn 1028-3625
dc.identifier.uri http://hdl.handle.net/1814/21988
dc.description.abstract In a setting where heterogeneous jurisdictions share a common policy, an increase in volatility breaks unanimous support for the status-quo and may prompt a subset of jurisdictions to favor either deepening the agreement through a fiscal union, or revert to autarky. A reassignment of political weights in the fiscal union may restore unanimous support for the common policy. We show how the bargaining space depends on relative country income, size, and cross country correlation of shocks. Finally, we discuss the future of a common currency in Europe and the different emphasis member countries have put on the choice of fiscal federalism versus autarky. en
dc.format.mimetype application/pdf
dc.language.iso en en
dc.relation.ispartofseries EUI RSCAS en
dc.relation.ispartofseries 2012/21 en
dc.relation.ispartofseries Global Governance Programme-17 en
dc.rights info:eu-repo/semantics/openAccess
dc.subject Fiscal Union en
dc.subject Common currency en
dc.subject Autarky en
dc.subject Bargaining space en
dc.subject Voting Weights en
dc.subject Heterogeneous countries en
dc.subject D70 en
dc.subject D78 en
dc.subject E62 en
dc.subject F15 en
dc.subject H77 en
dc.title A Volatility-based Theory of Fiscal Union Formation en
dc.type Working Paper en
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