The Effects of Joining a Monetary Union on Output and Inflation Variability in Accession Countries

MPRA Paper from University Library of Munich, Germany

Abstract: New EU member countries are supposed to adopt the Euro as soon as economic convergence is achieved. This paper analyzes the effects of joining a monetary union on output and inflation variability in small acceding countries. An asymmetric macroeconomic two-country model is specified and combined with two different monetary policy regimes: (i) national monetary policy, (ii) monetary union. The performance of the two regimes is analyzed in terms of inflation and output variability for a broad range of structural parameter specifications.

Keywords: European monetary union; open economy macroeconomic models; optimal monetary policy (search for similar items in EconPapers)
JEL-codes: F42 E52 F41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-mac, nep-mon, nep-opm and nep-tra
Date: 2007-12-14
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