Inflation Targets in a Monetary Union with Endogenous Entry

Stéphane Auray, Aurélien Eyquem and Poutineau, Jean-Christophe
Additional contact information
Poutineau, Jean-Christophe: CREM (UMR 6211) Universite de Rennes 1 and Ecole Normale Superieure de Cachan, France.

Cahiers de recherche from Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke

Abstract: This paper shows that in a monetary union the interest rate rule of the Central Bank should react to the in°ation rate of the Harmonized Index of Consumption Price (HICP) rather than to the inflation rate of the Welfare-Based Consumption Price (WBCP). In a two{country general equilibrium model of the EMU with endogenous entry, we compare both monetary policy regimes and find that targeting the HICP inflation rate reduces the volatility of the Producer Price Index (PPI) in°ation rate and the volatility of the nominal .

Keywords: monetary union; interest rate rule; harmonized index of consumption price (search for similar items in EconPapers)
JEL-codes: E51 E58 F36 F41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
Date: 2009
View list of references

Downloads: (external link)
http://pages.usherbrooke.ca/gredi/wpapers/GREDI-0902.pdf First version, 2009 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:shr:wpaper:09-02

Access Statistics for this paper

More papers in Cahiers de recherche from Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke
Contact information at EDIRC.
Series data maintained by Luc Savard ().