COORDINATION AND CRISIS IN MONETARY UNIONS

• 成果类型: Article
• 署名作者: Aguiar, Mark; Amador, Manuel; Farhi, Emmanuel; Gopinath, Gita
• 署名单位: Princeton University; Federal Reserve System - USA; Federal Reserve Bank - Minneapolis; Harvard University
• 刊物名称: QUARTERLY JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0033-5533
• DOI: 10.1093/qje/qjv022
• 发表日期: 2015
• 页码: 1727-1779
• 关键词: FISCAL-POLICY INTERACTIONS; Currency; COMMITMENT; DISCRETION; rules; MODEL

摘要

We study fiscal and monetary policy in a monetary union with the potential for rollover crises in sovereign debt markets. Member-country fiscal authorities lack commitment to repay their debt and choose fiscal policy independently. A common monetary authority chooses inflation for the union, also without commitment. We first describe the existence of a fiscal externality that arises in the presence of limited commitment and leads countries to overborrow; this externality rationalizes the imposition of debt ceilings in a monetary union. We then investigate the impact of the composition of debt in a monetary union, that is the fraction of high-debt versus low-debt members, on the occurrence of self-fulfilling debt crises. We demonstrate that a high-debt country may be less vulnerable to crises and have higher welfare when it belongs to a union with an intermediate mix of high-and low-debt members, than one where all other members are low-debt. This contrasts with the conventional wisdom that all countries should prefer a union with low-debt members, as such a union can credibly deliver low inflation. These findings shed new light on the criteria for an optimal currency area in the presence of rollover crises.