Munich Personal RePEc Archive

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.

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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.

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