Macroeconomic Analysis of Monetary Unions
A General Framework Based on the Mundell-Fleming Model
Business & Finance, Economics, Macroeconomics, Theory of Economics
| Author: | Oscar Bajo-Rubio, Carmen Díaz-Roldán | ISBN: | 9783642194450 |
| Publisher: | Springer Berlin Heidelberg | Publication: | May 6, 2011 |
| Imprint: | Springer | Language: | English |
| Author: | Oscar Bajo-Rubio, Carmen Díaz-Roldán |
| ISBN: | 9783642194450 |
| Publisher: | Springer Berlin Heidelberg |
| Publication: | May 6, 2011 |
| Imprint: | Springer |
| Language: | English |
The book develops a general framework for the macroeconomic modeling of monetary unions. The starting point of the analysis is the standard two-country Mundell-Fleming model with perfect capital mobility, extended to incorporate the supply side in a context of rigid real wages, and modified so that the money market is common for two countries forming a monetary union. The model is presented in two versions: for a small and a large monetary union, respectively. After solving each model, the authors derive multipliers for monetary, expenditure, supply, and external shocks, both in the short and the long run; a graphical analysis is also provided. Special attention is paid to the crucial distinction between symmetric and asymmetric shocks.
The book develops a general framework for the macroeconomic modeling of monetary unions. The starting point of the analysis is the standard two-country Mundell-Fleming model with perfect capital mobility, extended to incorporate the supply side in a context of rigid real wages, and modified so that the money market is common for two countries forming a monetary union. The model is presented in two versions: for a small and a large monetary union, respectively. After solving each model, the authors derive multipliers for monetary, expenditure, supply, and external shocks, both in the short and the long run; a graphical analysis is also provided. Special attention is paid to the crucial distinction between symmetric and asymmetric shocks.
