Author (Person) | Luque, Jaime |
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Publisher | European University Institute: Robert Schuman Centre for Advanced Studies |
Series Title | RSCAS Working Papers |
Series Details | No.21, May 2012 |
Publication Date | 01/05/2012 |
ISSN | 1028-3625 |
Content Type | Journal | Series | Blog |
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. |
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Source Link | http://hdl.handle.net/1814/21988 |
Subject Categories | Economic and Financial Affairs |
Countries / Regions | Europe |
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