Institutionalizing Eurozone Exit: A Modified NEWNEY Approach
8 Pages Posted: 22 Feb 2013
Date Written: February 21, 2013
Abstract
In this note, we argue that the Eurozone needs an institutional exit mechanism to enhance Eurozone stability, and propose modifications to the Dobbs' NEWNEY mechanism, the only mechanism that satisfies the twin properties of eliminating incentives for intra-Eurozone capital flight and maintaining Eurozone price stability. Our modifications eliminate moral hazard, allow for a fair distribution of costs (between and within countries) and are also appropriate for the exit of a fiscally strong country.
Keywords: Eurozone, Eurozone exit, price stability
JEL Classification: E440, E520
Suggested Citation: Suggested Citation
Huck, Steffen and Valasek, Justin, Institutionalizing Eurozone Exit: A Modified NEWNEY Approach (February 21, 2013). CESifo Working Paper Series No. 4116, Available at SSRN: https://ssrn.com/abstract=2221855 or http://dx.doi.org/10.2139/ssrn.2221855
Do you have negative results from your research you’d like to share?
Feedback
Feedback to SSRN
If you need immediate assistance, call 877-SSRNHelp (877 777 6435) in the United States, or +1 212 448 2500 outside of the United States, 8:30AM to 6:00PM U.S. Eastern, Monday - Friday.