Booms and Busts in EMU

Nils Gottfries ()

No 2003:29, Working Paper Series from Uppsala University, Department of Economics

Abstract: A floating exchange rate combined with a clear inflation target can be a powerful stabilizer even if there are fluctuations in exchange rates that are unrelated to current fundamentals. Under plausible conditions, most of the stabilisation will occur through the exchange rate, and fundamental shocks will generate considerable medium term exchange rate volatility. The consequences of asymmetric shocks inside EMU are worse than envisaged in early analyses of the EMU project such as Calmfors et al. (1997). Inflation and real interest rate differentials arise which magnify the imbalances and cause boom-bust cycles in the member countries.

Keywords: optimal currency area; imperfect competition; interest parity; real interest rate (search for similar items in EconPapers)
JEL-codes: E31 E32 E42 F41 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2003-12-09
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.nek.uu.se/pdf/wp2003_29.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.nek.uu.se/pdf/wp2003_29.pdf [301 Moved Permanently]--> https://www.nek.uu.se/pdf/wp2003_29.pdf [301 Moved Permanently]--> https://www.uu.se/institution/nationalekonomiska/pdf/wp2003_29.pdf)

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:hhs:uunewp:2003_029

Access Statistics for this paper

More papers in Working Paper Series from Uppsala University, Department of Economics Department of Economics, Uppsala University, P. O. Box 513, SE-751 20 Uppsala, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Ulrika Öjdeby ().