Dealing with the consequences of exchange rate misalignments for macroeconomic adjustments in the EMU

Vincent Duwicquet (), Jacques Mazier () and Jamel Saadaoui ()
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Jacques Mazier: CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique
Jamel Saadaoui: CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique, BETA - Bureau d'Économie Théorique et Appliquée - INRA - Institut National de la Recherche Agronomique - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique

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Abstract: The euro crisis sheds light on the nature of alternative adjustment mechanisms in the EMU. This article examines the exchange rate misalignments within the euro zone, using a FEER approach. To explore the consequences of these misalignments, we use an open economy SFC model with endogenous interest rates and Eurobonds. Facing a competitiveness loss in southern countries due to misalignments, three sets of alternative economic policy are investigated: a policy-mix based on tax rebates to improve competitiveness; an increase in intra-European financing by banks of northern countries; and an issuance of Eurobonds to pool European sovereign debt.

Keywords: EMU; FEER approach; Bank (search for similar items in EconPapers)
Date: 2018-11
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Citations: View citations in EconPapers (2)

Published in Metroeconomica, 2018, 69 (4), pp.737-767. ⟨10.1111/meca.12211⟩

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Journal Article: Dealing with the consequences of exchange rate misalignments for macroeconomic adjustments in the EMU (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02168400

DOI: 10.1111/meca.12211

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