Fiscal Unions

We study cross-country risk sharing as a second-best problem for members of a currency union using an open economy model with nominal rigidities and provide two key results. First, we show that if financial markets are incomplete, the value of gaining access to any given level of aggregate risk shar...

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Bibliographic Details
Published in:The American economic review 2017-12, Vol.107 (12), p.3788-3834
Main Authors: Farhi, Emmanuel, Werning, Iván
Format: Article
Language:English
Subjects:
Capital
Currencies
Economic models
Government spending
Macroeconomics
Markets
Monetary unions
Money
Political risk
Public debt
Redistribution
Risk
Risk sharing
Securities markets
Sharing
Stabilization
State intervention
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