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Cover von: Labor Mobility and Fiscal Policy in a Currency Union
Andrea Boitani, Angelo Baglioni, Massimo Bordignon

Labor Mobility and Fiscal Policy in a Currency Union

Rubrik: Articles
Jahrgang 72 (2016) / Heft 4, S. 371-406 (36)
Publiziert 09.07.2018
DOI 10.1628/001522116X14739287071698
Veröffentlicht auf Englisch.
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Labor mobility is commonly taken as a property of an optimal currency area (OCA). But how does that property affect the outcome of fiscal policies? In our model, we show that perfect (costless) labor mobility is not necessarily welfare-improving, since it prevents the national fiscal authorities from pursuing independent policies, opening the way to a coordination problem. With symmetric shocks, the federal fiscal policy can improve welfare by playing a coordinating role. With asymmetric shocks, the federal policy allows both countries to reach a higher productive efficiency, provided the federal government is endowed with a federal budget.