Characteristics of the Euro, the Demand for Reserves, and Policy Coordination Under Emu

37 Pages Posted: 15 Feb 2006

See all articles by Paul R. Masson

Paul R. Masson

International Monetary Fund (IMF) - Research Department; The Brookings Institution

Bart Turtelboom

Deutsche Bank, London

Date Written: May 1997

Abstract

The success of European Economic and Monetary Union (EMU) will depend on the stability of the euro. The monetary policy framework is yet to be decided, but is likely to involve either money or inflation targeting. Stochastic simulations compare the outcomes for major macroeconomic and financial variables pre- and post-EMU under both policy rules, as well as under an inflation targeting rule that includes output. Implications for the euro as a reserve currency are examined in the light of the expected returns and covariances among reserve currencies. The role of the exchange rate as an indicator and incentives for policy coordination with other major countries are also discussed.

JEL Classification: F33, F41, F42, F47

Suggested Citation

Masson, Paul R. and Turtelboom, Bart, Characteristics of the Euro, the Demand for Reserves, and Policy Coordination Under Emu (May 1997). IMF Working Paper No. 97/58, Available at SSRN: https://ssrn.com/abstract=882323

Paul R. Masson (Contact Author)

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States

The Brookings Institution ( email )

1775 Massachusetts Ave. NW
Washington, DC 20036-2188
United States
202-797-6278 (Phone)
202-797-2968 (Fax)

Bart Turtelboom

Deutsche Bank, London

Winchester House
Great Winchester Street, 1
London EC2N 2DB
United Kingdom

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