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The Eurozone is a type of incomplete monetary union. We showed that the incomplete monetary union is fragile. Using the simple model of incomplete monetary

The Eurozone is a type of incomplete monetary union. We showed that the incomplete monetary union is fragile. Using the simple model of incomplete monetary union (the benefits and costs of default depending on the size of solvency shock) discuss what would be the consequences if investors fear that the government might be defaulting on its debt. Compare the situation of euro and non-euro Member State depending on the size of solvency shock.

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