Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
7370378 | Journal of Public Economics | 2014 | 11 Pages |
Abstract
Heterogeneous countries may rationally choose to form a currency union first, and a fiscal union later. We find, and illustrate empirically for the EMU countries, reasonable volatility conditions under which this sequencing in the deepening process is indeed rationalizable. Changes in the distribution of expected income shocks require a reassignment of political weights to restore unanimous support for an added fiscal dimension. The bargaining space depends on countries' relative income, size, and cross correlation of shocks.
Related Topics
Social Sciences and Humanities
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Economics and Econometrics
Authors
Jaime Luque, Massimo Morelli, José Tavares,