Monetary-fiscal policies design and financial shocks in currency unions

Salvatore Capasso; Pasquale Foresti

doi:10.1007/s40888-024-00337-y

Monetary-fiscal policies design and financial shocks in currency unions

Salvatore Capasso, Pasquale Foresti

University of Roehampton

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Abstract

This paper analyzes the design of monetary and fiscal policies in a currency union by focusing on the capacity to react to symmetric and asymmetric financial shocks. The model is constructed in order to mimic the institutional design adopted for the policy making in the EMU. The paper shows how a currency union set-up like the one adopted by the EMU can easily cope with symmetric financial shocks. However, it shows how in the face of asymmetric shocks more space for fiscal interventions is crucial, especially in more peripheral member countries.

Original language	English
Pages (from-to)	439-455
Number of pages	17
Journal	Economia Politica - Journal of Analytical and Institutional Economics
Volume	41
Issue number	2
DOIs	https://doi.org/10.1007/s40888-024-00337-y
Publication status	Published - 1 Jul 2024

Keywords

E61
F33
F36
Monetary union
Monetary-fiscal policy, EMU
Financial shocks
E52

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10.1007/s40888-024-00337-y

40888_2024_Article_337.pdfFinal published version, 894 KBLicence: CC BY

Cite this

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