Optimal sequencing to reform the European Economic and Monetary Union: a roadmap
- In this paper, we examine the political gridlock in reforming the Economic and Monetary Union. We utilize a two–stage game with imperfect information in order to study the optimal sequencing. The main results are: first, optimal sequencing requires for incompliant Member States a default option in stage–two, which in principle is related to the today's fiscal architecture (EMU-I). Second, we show that compliant countries prefer a reform equilibrium today if and only if they have a free choice about the preferred fiscal architecture at the end — either EMU-II with binding European coordination or EMU-I related to Maastricht. Noteworthy, our sequencing approach works for any design of the EMU-II architecture.
| Author of HS Reutlingen | Herzog, Bodo |
|---|---|
| URN: | urn:nbn:de:bsz:rt2-opus4-32302 |
| DOI: | https://doi.org/10.3934/QFE.2021014 |
| ISSN: | 2573-0134 |
| Erschienen in: | Quantiative finance and economics |
| Publisher: | AIMS Press |
| Place of publication: | Springfield |
| Document Type: | Journal article |
| Language: | English |
| Publication year: | 2021 |
| Tag: | EMU; Maastricht; fiscal governance; reforming; sequencing |
| Volume: | 5 |
| Issue: | 2 |
| Page Number: | 14 |
| First Page: | 311 |
| Last Page: | 324 |
| DDC classes: | 330 Wirtschaft |
| Open access?: | Ja |
| Licence (German): |  Creative Commons - CC BY - Namensnennung 4.0 International |
