A GENERAL FRAMEWORK FOR THE MACROECONOMIC ANALYSIS OF MONETARY UNIONS

Oscar Bajo-Rubio () and Carmen Diaz-Roldan ()

No 101, Documentos de Trabajo - Lan Gaiak Departamento de Economía - Universidad Pública de Navarra from Departamento de Economía - Universidad Pública de Navarra

Abstract: The objective of this paper is to develop a general framework for the macroeconomic modelling of monetary unions, which could be useful for policy analysis, as well as for teaching purposes. Our starting point will be the standard twocountry Mundell-Fleming model with perfect capital mobility, extended to incorporate the supply side, 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 big monetary union, respectively. After solving each model, we will derive multipliers for monetary, real (i. e., demand-side), supply, and external shocks, paying a special attention to the distinction between symmetric and asymmetric shocks. A graphical analysis is also provided.

New Economics Papers: this item is included in nep-ifn and nep-mon
Date: 2001
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Working Paper: A GENERAL FRAMEWORK FOR THE MACROECONOMIC ANALYSIS OF MONETARY UNIONS (2001)
Working Paper: A General Framework for the Macroeconomic Analysis of Monetary Unions
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