Is Fiscal Policy Coordination Needed in a Common Currency Area?

Ansgar Belke and Daniel Gros

No 62, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: It is widely assumed that a common currency makes it desirable to have also a common fiscal policy. However, if fiscal policy is a source of shocks, independent national fiscal policies are generally preferable because they allow for risk diversification.

Keywords: Currency union; fiscal policy coordination; stabilisation (search for similar items in EconPapers)
JEL-codes: E63 F42 (search for similar items in EconPapers)
Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:62

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