Authors:

  • Emmanuel Farhi

Excerpt

Fiscal Unions. Emmanuel Farhi, June 2013, Paper. "We study cross-country insurance for members of a currency union using an open economy model with nominal rigidities and provide two key results. First, we show that, if financial markets are incomplete, the value of gaining access to any given level of insurance is greater for countries that are members of a currency union. Second, we show that, even if financial markets are complete, private insurance is inefficiently low. A role emerges for government intervention in macro insurance to both guarantee its existence and to influence its operation..."  Link verified March 28, 2014