Replication data for: Welfare Reversals in a Monetary Union

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Project Citation:

Auray, Stéphane, and Eyquem, Aurélien. Replication data for: Welfare Reversals in a Monetary Union. Nashville, TN: American Economic Association [publisher], 2014. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-10-12. https://doi.org/10.3886/E114308V1

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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V1 [2019-10-12]

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