The mechanics of a monetary union with segmented financial markets

Nuno Alves

Journal of Macroeconomics, 2008, vol. 30, issue 1, 346-368

Abstract: In this paper we characterize the transmission mechanism in a monetary union with segmented financial markets. We conclude that the impact of a monetary policy shock on the aggregate variables of the union depends on the degree of financial market segmentation. We also find that a monetary injection yields heterogeneous allocations across countries. In particular, a temporary monetary policy shock leads to permanent trade balance and current account effects. Further, the consumption correlation between countries is smaller than the output correlation. The degree of financial market segmentation and the endogenous distribution of liquidity in the monetary union are key to understanding this equilibrium.

Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0164-0704(06)00062-0
Full text for ScienceDirect subscribers only

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: https://EconPapers.repec.org/RePEc:eee:jmacro:v:30:y:2008:i:1:p:346-368

Access Statistics for this article

Journal of Macroeconomics is currently edited by Douglas McMillin and Theodore Palivos

More articles in Journal of Macroeconomics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().