Item Type | Monograph (Working Paper) |
Abstract | We propose a New Keynesian DSGE model of the Eurozone and analyze an asymmetric recession in a vulnerable member state characterized by a trilemma of high public debt, weak banks, and deteriorating competitiveness. We compare macroeconomic adjustment under continued membership with two exit scenarios that introduce flexible exchange rates and autonomous monetary policy. An exit with stable investor expectations could significantly dampen the short-run impact. Stabilization is achieved by a targeted monetary expansion combined with depreciation. However, investor panic may lead to escalation, aggravate the recession and delay the recovery. |
Authors | Keuschnigg, Christian; Kirschner, Linda; Kogler, Michael & Winterberg, Hannah |
Language | English |
Subjects | economics |
HSG Classification | contribution to scientific community |
HSG Profile Area | SEPS - Economic Policy |
Date | 2022 |
Publisher | Universität St. Gallen Department of Economics Discussion Paper |
Number | Nr. 2022-06 |
Depositing User | Michael Kogler |
Date Deposited | 03 Aug 2022 08:55 |
Last Modified | 28 Sep 2022 09:19 |
URI: | https://www.alexandria.unisg.ch/publications/266805 |
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CitationKeuschnigg, Christian; Kirschner, Linda; Kogler, Michael & Winterberg, Hannah: Monetary Union, Asymmetric Recession, and Exit. , 2022, Nr. 2022-06. Statisticshttps://www.alexandria.unisg.ch/id/eprint/266805
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