Fidrmuc, Jan, (2015), “Political economy of fiscal unions”, European Journal of Political Economy, Δεκέμβριος
Fiscal unions often use fiscal transfers to counter asymmetric shocks, but such transfers may be politically controversial. I present a model of a two-region fiscal union with region-specific shocks where the threat of secession imposes a limit on fiscal redistribution between regions. I show that both correlation of shocks across regions and their persistence over time are important for political support for integration. The gains from inter-regional risk sharing are potentially large when shocks are negatively correlated and temporary. In contrast, unions with negatively correlated permanent shocks are likely to be fragile.
Σχετικές Αναρτήσεις
- Wolff, Guntram B., Bénassy-Quéré, Agnès, (2016), “ECB decisions put lack of fiscal union in the spotlight”, Bruegel, 30 Μαρτίου
- Bénassy-Quéré, Agnès, Ragot, Xavier, Wolff, Guntram B., (2016), “Which fiscal union for the euro area?”, Bruegel Publications, Issue 2016/05, 18 Φεβρουαρίου.