Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/116770
Authors: 
Hebous, Shafik
Weichenrieder, Alfons J.
Year of Publication: 
2015
Series/Report no.: 
SAFE Working Paper Series 112
Abstract: 
There is a growing debate about complementing the European Monetary Union by a more comprehensive fiscal union. Against this background, this paper emphasizes that there is a trade-off in designing a system of fiscal transfers ("fiscal capacity") in a union between members of different size. A system cannot guarantee symmetric treatment of members and simultaneously ensure a balanced budget. We compute hypothetical transfers for the Eurozone members from 2001 to 2012 to illustrate this trade-off. Interestingly, a symmetric system that treats shocks in small and large countries symmetrically would have produced large budgetary surpluses in 2009, the worst year of the financial crisis.
Subjects: 
fiscal union
asymmetric shocks
federal transfers
optimum currency area
JEL: 
H50
H60
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size
714.75 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.