The Nominal Exchange Rate Implication of VAT Harmonization in EEC

Dai, Meixing (1995): The Nominal Exchange Rate Implication of VAT Harmonization in EEC.

Abstract

This paper examines, in a one-good two-country Cournot competition model, the implication of European VAT reform on the nominal exchange rate parities which will be pegged in the third stage of monetary union. As result of the reform, the deutchmark needs to be reevaluated so as to prevent generating systematic external disequilibrium of some other European countries, which is inconsistent with pegging nominal exchange parities of European currencies.

• Item Type: MPRA Paper
• Language: English
• Keywords: nominal exchange rate parities, value-added-tax reform, monetary union
• Subjects: F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F41 - Open Economy Macroeconomics; F - International Economics > F3 - International Finance > F31 - Foreign Exchange

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