|
|
|
|
||||
|
||||
Common Monetary Policy with Asymmetric ShocksDaniel GrosCentre for European Policy Studies, Brussels; CESifo (Center for Economic Studies and Ifo Institute for Economic Research) Carsten HefekerHWWA Institute of International Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research) April 2002 CESifo Working Paper Series No. 705 Abstract: What policy objective should a common central bank in a heterogeneous monetary union pursue? Should it base its decisions on the EU-wide average of inflation and growth or should it instead focus on (appropriately weighted) national welfare losses based on national rates of inflation and growth? We find that a central bank that minimises the sum of national welfare losses reacts less to common shocks. This can lead to higher average union-wide expected welfare if the variability of common shocks is large relative to the inflation bias and if idiosyncratic demand shocks in the non-tradables sector are not too high.
Number of Pages in PDF File: 20 Keywords: Monetary Policy, Monetary Union, Transmission Mechanism JEL Classification: E52, E61, F33 working papers seriesDate posted: June 17, 2002Suggested CitationContact Information
|
|
|||||||||||||||||||||||||||||||||
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
FAQ
Terms of Use
Privacy Policy
Copyright
This page was processed by apollo6 in 0.375 seconds
