The delegation of monetary policy to a supranational central bank creates a conflict of interest between residents of different countries. For example, the country in recession may favor more inflation to boost output, while the country in boom prefers exactly the opposite. This conflict gives...

As European countries strive to meet the Maastricht criteria before the end of 1997, doubts and concerns about the new institutional framework are rapidly growing . On one hand, the worsening unemployment rate raises the spectre of further tightening of fiscal and monetary policy (Bankers'...

In this paper we analyze how the creation of a single currency regime changes the strategic relationship between policy makers, both within and across countries. in particular we look at the role of cross-country externalities and lack of commitment. When labor taxation is excessive, due to...

This paper argues that fiscal convergence in the Euro area has been achieved at the expenses of real divergence in unemployment, investment and at, at least temporarily, growth. Statistical and econometric analysis support the view that the current fiscal framework has addressed debt...

This paper addresses the following questions. Is there evidence of financial contagion in the Eurozone? To what extent a country's vulnerability to contagion depends on "fundamentals" as opposed the government's "credibility"? We look at the empirical evidence on European sovereigns CDS spreads...