Replication data for: Welfare Reversals in a Monetary Union

Principal Investigator(s): View help for Principal Investigator(s) Stéphane Auray; Aurélien Eyquem

Name	File Type	Size	Last Modified
policy			10/12/2019 10:04:PM
simple_model			10/12/2019 10:04:PM
sw			10/12/2019 10:05:PM
read_me.aux	text/x-tex	154 bytes	10/12/2019 06:05:PM
read_me.bak	text/x-tex	5.8 KB	10/12/2019 06:05:PM
read_me.log	text/plain	9.3 KB	10/12/2019 06:05:PM
read_me.pdf	application/pdf	31.2 KB	10/12/2019 06:05:PM
read_me.tex	text/x-tex	5.8 KB	10/12/2019 06:04:PM
run_programs.asv	text/plain	2 KB	10/12/2019 06:05:PM
run_programs.m	text/plain	1 KB	10/12/2019 06:05:PM

Project Description

Summary: We show that welfare can be lower under complete financial markets than under autarky in a monetary union with home bias, sticky prices, and asymmetric shocks. Such a monetary union is a second- best environment in which the structure of financial markets affects risk-sharing but also shapes the dynamics of inflation rates and the welfare costs from nominal rigidities. Welfare reversals arise for a variety of empirically plausible degrees of price stickiness when the Marshall-Lerner condition is met. These results carry over a model with active fiscal policies, and hold within a medium-scale model, although to a weaker extent.

Scope of Project

Subject Terms: [Model Simulations, Matlab Codes, Dynare Codes]

JEL Classification:
      E31 Price Level; Inflation; Deflation
      E52 Monetary Policy
      E62 Fiscal Policy
      F33 International Monetary Arrangements and Institutions
      F41 Open Economy Macroeconomics

Data Type(s): program source code

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Published Versions

V1 [2019-10-12]

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DDI 2.5

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