Macroeconomic Stabilization and Asymmetrical Information in a Heterogeneous Monetary Union

The subsidiarity principle governing the collection of statistical data in the EMU may cause asymmetrical information. The national governments may be tempted to distort their economic and financial data communicated to ECB in order to influence its monetary policy decisions. We base our analysis on a static Keynesian model in a closed monetary Union and we prove that the governments' incentives to modify their private information depend mainly on the nature of the asymmetrical information between the Union's policy-makers, on the degree of monetary activism and on the extent of structural heterogeneity between the Union's members.