Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/146176
Authors: 
Brede, Maren
Year of Publication: 
2016
Series/Report no.: 
SFB 649 Discussion Paper 2016-007
Abstract: 
In light of persistent in ation dispersion and rising debt levels in the EMU, this paper investigates the welfare implications of budget-neutral scal policies that counteract in ation di erentials. In a two-country DSGE model of a monetary union with traded and non-traded goods a national scal authority is able to reduce welfare losses arising from asymmetric shocks by following a Taylor-type rule for consumption taxes while using labour income taxes to balance its budget. Under technology and government spending shocks welfare losses can be reduced by up to 15%.
Subjects: 
inflation differentials
monetary union
fiscal policy
budget-neutral policy
JEL: 
E62
E63
F41
F45
Document Type: 
Working Paper

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