The Effects of Joining a Monetary Union on Output and Inflation Variability in Accession Countries

Holtemöller, Oliver (2007): The Effects of Joining a Monetary Union on Output and Inflation Variability in Accession Countries.

Abstract

New EU member countries are supposed to adopt the Euro as soon as economic convergence is achieved. This paper analyzes the effects of joining a monetary union on output and inflation variability in small acceding countries. An asymmetric macroeconomic two-country model is specified and combined with two different monetary policy regimes: (i) national monetary policy, (ii) monetary union. The performance of the two regimes is analyzed in terms of inflation and output variability for a broad range of structural parameter specifications.

• Item Type: MPRA Paper
• Language: English
• Keywords: European monetary union; open economy macroeconomic models; optimal monetary policy
• Subjects: F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F42 - International Policy Coordination and Transmission; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F41 - Open Economy Macroeconomics

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