A GENERAL FRAMEWORK FOR THE MACROECONOMIC ANALYSIS OF MONETARY UNIONS

Oscar Bajo-Rubio () and Carmen Diaz-Roldan

No 01-06, Working Papers from Asociación Española de Economía y Finanzas Internacionales

Abstract: The objective of this paper is to develop a general framework for the macroeconomic modelling of monetary unions, which could be useful for policy analysis, as well as for teaching purposes. Our starting point will be the standard twocountry Mundell-Fleming model with perfect capital mobility, extended to incorporate the supply side, and modified so that the money market is common for two countries forming a monetary union. The model is presented in two versions: for a small and a big monetary union, respectively. After solving each model, we will derive multipliers for monetary, real (i. e., demand-side), supply, and external shocks, paying a special attention to the distinction between symmetric and asymmetric shocks. A graphical analysis is also provided.

Pages: 45 pages
Date: 2001-06
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: A GENERAL FRAMEWORK FOR THE MACROECONOMIC ANALYSIS OF MONETARY UNIONS (2001)
Working Paper: A General Framework for the Macroeconomic Analysis of Monetary Unions
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