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Does a Currency Union Need a Capital Market Union? Risk Sharing via Banks and Markets / Joseba Martinez, Thomas Philippon, Markus Sihvonen.
- Format:
- Book
- Author/Creator:
- Martinez, Joseba.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w26026.
- NBER working paper series no. w26026
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2019.
- Summary:
- We compare risk sharing in response to demand and supply shocks in four types of currency unions: segmented markets; a banking union; a capital market union; and complete financial markets. We show that a banking union is efficient at sharing all domestic demand shocks (deleveraging, fiscal consolidation), while a capital market union is necessary to share supply shocks (productivity and quality shocks). Using a calibrated model we provide evidence of substantial welfare gains from a banking union and, in the presence of supply shocks, from a capital market union.
- Notes:
- Print version record
- June 2019.
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