A1 - Benjamin Carton
TI - Tax Reform and Coordination in a Currency Union
IS - 2012-23
T3 - Working Papers
KW - Fiscal Policy
KW - Monetary Policy
KW - Value added tax
KW - Monetary Union
N2 - We propose a two-country DSGE model to analyze short-term and long-term impact of a modification of consumption and labor tax rate in one country in a currency union. The model embodies the fact that firms differ in their pricing behavior after a VAT tax increase. Due to the common monetary policy, national tax policies have large spill-overs on the rest of the currency union. Furthermore, a fiscal devaluation is different from a nominal devaluation due to the common monetary policy.
ER -