This paper presents a new rationalization for bailouts of sovereign debt in monetary unions, such as those observed during the recent Euro crisis. It introduces a model where member countries of the monetary union are ex-ante identical, and each derives utility from consumption and disutility from the union-wide inflation rate. The union’s central bank is utilitarian and lacks commitment. Countries borrow or save in a market for nominal sovereign debt in response to idiosyncratic income shocks, with countries that receive positive income shocks saving and countries that receive negative income shocks borrowing. Ex post, the monetary union’s central bank will attempt to devalue sovereign debt through surprise inflation, as this will redistribute income from rich creditor countries to poor debtor countries. Creditor countries choose to bailout debtor countries because bailouts will weaken the redistributive motives of the central bank and forestall surprise inflation. As bailouts in this environment constitute a payment from lucky creditor countries to unlucky debtor countries, they mimic a risk-sharing arrangement that insures against income shocks. The payments made by creditor countries are incentive-compatible due to the shared currency and inflation rate in the monetary union. This ability of countries to provide each other with incentive-compatible insurance constitutes a novel theory of optimal currency areas. This insurance benefit of the monetary union is largest for countries with negatively correlated income shocks, in contrast to the classic Mundell-Friedman optimal currency area criterion.

中文翻译：

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货币联盟中的救助、通货膨胀和风险分担

本文提出了货币联盟中救助主权债务的新合理化，例如在最近的欧元危机期间观察到的那些。它引入了一个模型，其中货币联盟的成员国事前相同，每个成员国都从消费中获得效用，而从整个联盟范围内的通货膨胀率中获得不效用。工会的中央银行是功利主义的，缺乏承诺。为应对特殊收入冲击，各国在名义主权债务市场上借贷或储蓄，接受正收入冲击的国家储蓄，接受负收入冲击的国家借款。事后，货币联盟的中央银行将试图通过意外通胀使主权债务贬值，因为这会将收入从富裕的债权国重新分配给贫穷的债务国。债权国之所以选择救助债务国，是因为救助会削弱央行的再分配动机，防止意外通胀。由于这种环境下的救助是幸运的债权国向不幸的债务国支付的款项，因此它们模仿了一种风险分担安排，以确保免受收入冲击。由于货币联盟的共同货币和通货膨胀率，债权国支付的款项与激励相容。国家相互提供激励相容保险的这种能力构成了最优货币区的新理论。与经典的蒙代尔 - 弗里德曼最优货币区标准相比，货币联盟的这种保险利益对于收入冲击呈负相关的国家来说是最大的。