Welfare Reversals in a Monetary Union

• 成果类型: Article
• 署名作者: Auray, Stephane; Eyquem, Aurelien
• 署名单位: Ecole Nationale de la Statistique et de l'Analyse de l'Information (ENSAI); Ecole Nationale de la Statistique et de l'Analyse de l'Information (ENSAI); Centre National de la Recherche Scientifique (CNRS); Ecole Normale Superieure de Lyon (ENS de LYON); Universite Claude Bernard Lyon 1; Universite Jean Monnet; Universite Lyon 2
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MACROECONOMICS
• ISSN/ISSBN: 1945-7707
• DOI: 10.1257/mac.6.4.246
• 发表日期: 2014
• 页码: 246-290
• 关键词: fiscal-policy; open-economy; asset trade; integration; rules; MODEL

摘要

We show that welfare can be lower under complete financial markets than under autarky in a monetary union with home bias, sticky prices, and asymmetric shocks. Such a monetary union is a second-best environment in which the structure of financial markets affects risk-sharing but also shapes the dynamics of inflation rates and the welfare costs from nominal rigidities. Welfare reversals arise for a variety of empirically plausible degrees of price stickiness when the Marshall-Lerner condition is met. These results carry over a model with active fiscal policies, and hold within a medium-scale model, although to a weaker extent.