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: Add references at CitEc
Citations: View citations in EconPapers (56)

Downloads: (external link)
https://doi.org/10.1111/1468-0475.00059 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

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:bpj:germec:v:3:y:2002:i:3:p:247-262

Ordering information: This journal article can be ordered from
https://www.degruyter.com/journal/key/ger/html

DOI: 10.1111/1468-0475.00059

Access Statistics for this article

German Economic Review is currently edited by Peter Egger, Almut Balleer, Jesus Crespo-Cuaresma, Mario Larch, Aderonke Osikominu and Georg Wamser

More articles in German Economic Review from De Gruyter
Bibliographic data for series maintained by Peter Golla ().