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FISCAL UNION CONSENSUS DESIGN UNDER THE THREAT OF AUTARKY
Centre for Economic Policy Research (2011)
  • Jaime Luque, Universidad Carlos III de Madrid
  • Massimo Morelli, Columbia University
  • José Tavares
Abstract

Inspired by the current debate over the future of the monetary union in Europe, this paper provides a simple model for the determination of the conditions of survival of the common good, which requires the creation of an effective fiscal union. We highlight the importance of institutional design and varying decision weights for the enlargement of the space for consensus. Our model deepens the discussion of economic risk and political risk in fiscal federalism, and highlights the related roles of country heterogeneity and institutional design in enlarging the scope for cross country fiscal agreements.

Keywords
  • autarky,
  • consensus,
  • fiscal union,
  • heterogeneous countries,
  • uncertainty and voting weights
Disciplines
Publication Date
2011
Citation Information
Jaime Luque, Massimo Morelli and José Tavares. "FISCAL UNION CONSENSUS DESIGN UNDER THE THREAT OF AUTARKY" Centre for Economic Policy Research (2011)
Available at: http://works.bepress.com/josetavares/26/