A Monetary Union Model with Cash-in-Advance Constraints

Cengiz, Gulfer and Cicek, Deniz and Kuzubas, Tolga Umut and Olcay, Nadide Banu and Saglam, Ismail (2007): A Monetary Union Model with Cash-in-Advance Constraints.

Abstract

We characterize the monetary competitive equilibrium in a two-country monetary union model involving cash-in-advance constraints both in the factor markets and in the good markets. Simulations show that common money inflation in the union have asymmetric effects on the welfare of workers in the two countries which are technologically differentiated. We also find that the distribution of the money stock within the union may affect labor flow across the countries.

• Item Type: MPRA Paper
• Institution: Bogazici University
• Language: English
• Keywords: Monetary union; cash-in-advance; monetary policy
• Subjects: F - International Economics > F2 - International Factor Movements and International Business > F22 - International Migration; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E24 - Employment ; Unemployment ; Wages ; Intergenerational Income Distribution ; Aggregate Human Capital ; Aggregate Labor Productivity

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