Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/112826
Authors: 
Müller, Gernot Johannes
Hettig, Thomas
Mueller, Gernot
Year of Publication: 
2015
Series/Report no.: 
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2015: Ökonomische Entwicklung - Theorie und Politik - Session: Common Currencies F11-V3
Abstract: 
Within currency unions, according to the pre-crises consensus, countries can rely on fiscal policy to stabilize economic activity locally. Monetary policy's role, in turn, is to stabilize economic activity at the union level. Against this background, we reassess the optimal degree of fiscal stabilization within currency union provided that monetary policy is constrained by the zero lower bound on nominal interest rates. Specifically, we contrast the optimal level of government consumption from an individual country's perspective with the optimal level from the union's perspective and explore the need for coordinating expansionary fiscal policies.
JEL: 
E62
F41
E61
Document Type: 
Conference Paper

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