Thoughts on a Fiscal Union in EMU

Gadatsch Niklas, Hollmayr Josef and Nikolai Stähler
Additional contact information
Gadatsch Niklas: Deutsche Bundesbank,Frankfurt, Germany
Hollmayr Josef: Deutsche Bundesbank,Frankfurt, Germany

German Economic Review, 2019, vol. 20, issue 4, e360-e384

Abstract: Using an estimated large-scale New Keynesian model, we assess the consequences of introducing a fiscal union within EMU. We differentiate between three different scenarios: public revenue equalisation, tax harmonisation and a centralised fiscal authority. Our results indicate that no country would significantly benefit from introducing any form of fiscal union. Comparing long-term, that is, steady state, effects we have winners and losers depending on the scenario. Differences in terms of business cycle statistics as well as in terms of risk sharing of asymmetric shocks are minor. This also explains why welfare differences are small across the fiscal union scenarios. A counterfactual exercise indicates that with a fiscal union regime already installed at the start of EMU, key macroeconomic variables would have reacted very similarly while debt dynamics would have changed notably.

Keywords: Fiscal policy; fiscal union; DSGE-modelling; macroeconomics (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/geer.12169 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
Journal Article: Thoughts on a Fiscal Union in EMU (2019)
Working Paper: Thoughts on a fiscal union in EMU (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bpj:germec:v:20:y:2019:i:4:p:e360-e384

Ordering information: This journal article can be ordered from
https://www.degruyter.com/journal/key/ger/html

DOI: 10.1111/geer.12169

Access Statistics for this article

German Economic Review is currently edited by Peter Egger, Almut Balleer, Jesus Crespo-Cuaresma, Mario Larch, Aderonke Osikominu and Georg Wamser

More articles in German Economic Review from De Gruyter
Bibliographic data for series maintained by Peter Golla ().