Ruhr Economic Papers

Ruhr Economic Papers #62

Is Fiscal Policy Coordination Needed in a Common Currency Area?

by Ansgar Belke and Daniel Gros

RWI, 08/2008, 13 S./p., 8 Euro, ISBN 978-3-86788-066-4



It is widely assumed that a common currency makes it desirable to have also a common fiscal policy. However, if fiscal policy is a source of shocks, independent national fiscal policies are generally preferable because they allow for risk diversification.

JEL-Classification: E63, F42

Keywords: Currency union; fiscal policy coordination; stabilisation