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Monetary policy transmission asymmetries in a heterogeneous monetary union: a simple contractual solution

Cristina Badarau (), Patrick Villieu () and Nelly Gregoriadis ()
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Nelly Gregoriadis: Laboratoire dEconomie d'Orleans, France

Economics Bulletin, 2008, vol. 5, issue 20, 1-7

Abstract: In this paper, we show that imposing linear penalties on inflation and income divergences to a common central bank could be an interesting solution to stabilization problems in a heterogeneous monetary Union. We find an “optimal contract” for monetary policy which enforces the optimal solution for maximizing Union-wide welfare. This contract may provide a good institutional response to stabilization problems raised by monetary policy transmission asymmetries, as described in De Grauwe & Senegas (2004).

JEL-codes: E5 F3 (search for similar items in EconPapers)
Date: 2008-07-21
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Related works:
Working Paper: Monetary Policy Transmission Asymmetries in a Heterogeneous Monetary Union: a Simple Contractual Solution (2008)
Working Paper: Monetary Policy Transmission Asymmetries in a Heterogeneous Monetary Union: a Simple Contractual Solution (2008)
Working Paper: Monetary Policy Transmission Asymmetries in a Heterogeneous Monetary Union: a Simple Contractual Solution (2008)
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