Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/250335
Year of Publication: 
2021
Series/Report no.: 
Cardiff Economics Working Papers No. E2021/11
Publisher: 
Cardiff University, Cardiff Business School, Cardiff
Abstract: 
We construct a macro DSGE model of the eurozone and its two main regions, the North and the South, with the aim of matching the macro facts of these economies by indirect inference and using the resulting empirically-based model to assess possible new policy regimes. The model we have found to fit the facts suggests that substantial gains in macro stability and consumer welfare are possible if the fiscal authority in each region is given the freedom to respond to its own economic situation. Further gains could come with the restoration of monetary independence to the two regions, in effect creating a second 'southern euro' bloc.
Subjects: 
eurozone
macro stability
fiscal policy
monetary independence
JEL: 
E32
E52
E62
F41
Document Type: 
Working Paper

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