Institutionalizing Eurozone Exit: A Modified NEWNEY Approach

Steffen Huck and Justin Mattias Valasek

No 4116, CESifo Working Paper Series from CESifo

Abstract: In this note, we argue that the Eurozone needs an institutional exit mechanism to enhance Eurozone stability, and propose modifications to the Dobbs' NEWNEY mechanism, the only mechanism that satisfies the twin properties of eliminating incentives for intra-Eurozone capital flight and maintaining Eurozone price stability. Our modifications eliminate moral hazard, allow for a fair distribution of costs (between and within countries) and are also appropriate for the exit of a fiscally strong country.

Keywords: Eurozone; Eurozone exit; price stability (search for similar items in EconPapers)
JEL-codes: E44 E52 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Institutionalizing eurozone exit: A modified NEWNEY approach (2012)
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