We assess the role of national fiscal policies, as automatic stabilizers, within a monetary union. We use a two-country New Keynesian DGE model which incorporates non-Ricardian consumers (as in Gal? et al. 2004) and a home bias in the composition of national consumption bundles. We find that...

The equilibrium size of a nation state is, in part, the result of a trade-off between the gains from scale economies in the provision of public services and the costs of applying uniform policy to heterogeneous cultural, institutional, and geographical fundamentals. Changes in such fundamentals...