It is widely debated whether a monetary union has to be accompanied by a fiscal transfer scheme to accommodate asymmetric shocks. We build a model of a monetary union with a central bank and two heterogeneous countries that are linked by a fiscal transfer scheme with repercussions on monetary...

Die EU-Kommission hatte im Januar 2002 die Haushaltslage in Deutschland zum Anlass genommen, dem Ecofin-Rat zu empfehlen, gegenüber Deutschland eine Frühwarnung auszusprechen. Der so genannte „Blaue Brief" des Rates konnte auf Intervention der Bundesregierung vermieden werden. Die...

The paper addresses the question what effects the enlargement of a monetary union will have on necessary structural refoms in the (low distortion) member countries and the (high distortion) candidate country. While monetary union lowers reforms in the candidate country, members of the monetary...