Imbalances and fiscal policy in a monetary union

• 成果类型: Article
• 署名作者: Hjortsoe, Ida
• 署名单位: Bank of England
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2016.07.002
• 发表日期: 2016
• 页码: 225-241
• 关键词: Monetary union; International policy cooperation; Optimal monetary and fiscal policies; risk sharing

摘要

This paper analyses optimal fiscal policy within a model of a monetary union in which agents cannot perfectly insure themselves against country-specific shocks. I show that optimal cooperative fiscal policies consist in more than just stabilizing output gaps: policy makers can increase welfare by responding to sub-optimal intra-union imbalances. Numerical analysis reveals that if traded goods are little substitutable, optimal cooperative fiscal policies consist in setting government spending in each country so as to reduce intra-union imbalances, potentially at the expense of higher output gaps. Optimal fiscal policies reduce the welfare losses from business cycle fluctuations considerably. (C) 2016 The Author. Published by Elsevier B.V. All rights reserved.