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Fiscal stabilisation in monetary unions
Following the Great Recession, Europe is one again debating the use of fiscal instruments for macroeconomic stabilisation, with the experience of a monetary union with common fiscal shock absorbers, such as in the US, as a reference. Research on fiscal stabilisation and risk-sharing in the US was originally a reference for Economic and Monetary Union (EMU). Sachs and Sala-i-Martin (1992), Von Hagen (1992), and Bayoumi and Masson (1995) proposed different approaches to quantify the role of fiscal transfers in the US for redistribution and risk sharing, and to draw lessons for the forthcoming EMU. But the EMU does not ... (full story)