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Helping with the Homework: Support Mechanisms for Uncertain Reforms in a Monetary Union

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  • Hefeker Carsten

    (University of Siegen and CESifo, 57068Siegen, Germany)

Abstract

A lack of structural reforms is often considered as a major problem in many member countries of EMU. This lack is arguably partly due to uncertainty about outcomes and a disregard for how policies spill over to other countries. Monetary union can reinforce this underprovision of structural reforms. Because centralization of structural policies is politically not feasible, I discuss subsidies for reforms and insurance against negative outcomes as alternative mechanisms that increase reform efforts. The paper derives the optimal use of those mechanisms and discusses their implementability.

Suggested Citation

  • Hefeker Carsten, 2019. "Helping with the Homework: Support Mechanisms for Uncertain Reforms in a Monetary Union," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 239(5-6), pages 983-1004, October.
    • Handle: RePEc:jns:jbstat:v:239:y:2019:i:5-6:p:983-1004:n:1
    DOI: 10.1515/jbnst-2018-0075
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    More about this item

    Keywords

    Monetary union; policy reforms; spillovers; uncertainty; subsidy; insurance;
    All these keywords.

    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • F45 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Macroeconomic Issues of Monetary Unions
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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