Monetary Policy in Europe A

Michael Carlberg ()
Additional contact information
Michael Carlberg: Federal University of Hamburg

Chapter 15 in Strategic Policy Interactions in a Monetary Union, 2009, pp 1-9 from Springer

Abstract: For ease of exposition we assume that the monetary union consists of two countries, say Germany and France. The member countries are the same size and have the same behavioural functions. An increase in European money supply lowers unemployment in Germany and France. On the other hand, it raises producer inflation there. Here producer inflation in Germany refers to the price of German goods. Similarly, producer inflation in France refers to the price of French goods. The model of unemployment and inflation can be represented by a system of four equations: (1) $${\rm u}_1 = {\rm A}_1 - {\rm M}$$ (2) $${\rm u}_2 = {\rm A}_2 - {\rm M}$$ (3) $${\rm \pi }_1 = {\rm B}_1 + {\rm M}$$ (4) $${\rm \pi }_2 = {\rm B}_2 + {\rm M}$$ Of course this is a reduced form. Here u1 denotes the rate of unemployment in Germany, u2 is the rate of unemployment in France, π1 is the rate of inflation in Germany, π2 is the rate of inflation in France, M is European money supply, A1 is some other factors bearing on the rate of unemployment in Germany, A2 is some other factors bearing on the rate of unemployment in France, B1 is some other factors bearing on the rate of inflation in Germany, and B2 is some other factors bearing on the rate of inflation in France. The endogenous variables are the rate of unemployment in Germany, the rate of unemployment in France, the rate of inflation in Germany, and the rate of inflation in France.

Keywords: Monetary Policy; Loss Function; Positive Function; Member Country; European Central Bank (search for similar items in EconPapers)
Date: 2009
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:spr:sprchp:978-3-540-92751-8_15

Ordering information: This item can be ordered from
http://www.springer.com/9783540927518

DOI: 10.1007/978-3-540-92751-8_15

Access Statistics for this chapter

More chapters in Springer Books from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().