One Size Must Fit All: National Divergences in a Monetary Union

Daniel Gros and Carsten Hefeker

German Economic Review, 2002, vol. 3, issue 3, 247-262

Abstract: Should a common central bank in a heterogeneous monetary union base its decisions on EU‐wide averages of economic variables or on national welfare losses? A central bank that minimizes the sum of national welfare losses reacts less to common shocks. Under certain parameter constellations this leads to higher average union‐wide expected welfare and it might thus be preferable that decision‐making is dominated by national representatives. Countries with a transmission mechanism far from the average benefit from an orientation on national welfare losses. For countries with a transmission mechanism close to the average, welfare can be lower in this case.

Date: 2002
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (57)

Downloads: (external link)
https://doi.org/10.1111/1468-0475.00059

Related works:
Journal Article: One Size Must Fit All: National Divergences in a Monetary Union (2002)
Working Paper: One Size Must Fit All. National Divergences in a Monetary Union (2000)
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: https://EconPapers.repec.org/RePEc:bla:germec:v:3:y:2002:i:3:p:247-262

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1465-6485

Access Statistics for this article

German Economic Review is currently edited by Bernhard Felderer, Joseph F. Francois, Ivo Welch, Urs Schweizer and David E. Wildasin

More articles in German Economic Review from Verein für Socialpolitik Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().