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Author: Ronald MacDonald Publisher: ISBN: Category : Languages : en Pages :
Book Description
We propose an alternative explanation for the nature, sources and consequences of inflation rate differentials in a monetary union, such as the euro area. We build on the new neoclassical synthesis (NNS) framework, recently advanced by Goodfriend (2002) and Goodfriend and King (2000). Based on the NNS setup, we discuss the inflationary consequences of the catching-up process in a heterogeneous monetary union. In particular, we explore the interaction between catching-up and inflation differentials and offer an interpretation of the nature of this interaction. We demonstrate that divergent inflation rates between Member States do not necessarily have to be an equilibrium phenomenon, even if the original shock comes from the supply-side of the economy. Second, we show how such divergence of individual country's inflation rates may arise when countries differ in size and in trend productivity growth.
Author: Ronald MacDonald Publisher: ISBN: Category : Languages : en Pages :
Book Description
We propose an alternative explanation for the nature, sources and consequences of inflation rate differentials in a monetary union, such as the euro area. We build on the new neoclassical synthesis (NNS) framework, recently advanced by Goodfriend (2002) and Goodfriend and King (2000). Based on the NNS setup, we discuss the inflationary consequences of the catching-up process in a heterogeneous monetary union. In particular, we explore the interaction between catching-up and inflation differentials and offer an interpretation of the nature of this interaction. We demonstrate that divergent inflation rates between Member States do not necessarily have to be an equilibrium phenomenon, even if the original shock comes from the supply-side of the economy. Second, we show how such divergence of individual country's inflation rates may arise when countries differ in size and in trend productivity growth.
Author: Ronald MacDonald Publisher: ISBN: Category : Languages : en Pages : 31
Book Description
In this paper we propose an alternative explanation for the nature, sources and consequences of inflation rate differentials in a monetary union, such as EMU. To achieve this, we build on the new neoclassical synthesis (NNS) framework, recently advanced by Goodfriend (2002) and Goodfriend and King (2000). Based on the NNS setup, we discuss the inflationary consequences of the catching-up process in a heterogeneous monetary union. In particular, we explore the interaction between catching-up and inflation differentials and offer an interpretation of the nature of this interaction. Our discussion is in stark contrast to the conventional Balassa-Samuelson (BS) interpretation. In particular, we demonstrate that divergent inflation rates between Member States do not necessarily have to be an equilibrium phenomenon, even if the original shock comes from the supply-side of the economy. Second, we show how a centralized monetary policy may produce such divergence of individual country's inflation rates when countries differ in size and in trend productivity growth. Against this background, we additionally show how the catching up may potentially lead to unsustainable credit booms in a catching-up member country. Finally, we indicate some important deficiencies of the BS model as a guide to short- and medium-run policy making analysis.
Author: Ronald MacDonald Publisher: ISBN: Category : Languages : en Pages : 26
Book Description
In this paper we propose an alternative explanation for the nature, sources and consequences of inflation rate differentials in a monetary union, such as EMU. To achieve this, we build on the new neoclassical synthesis (NNS) framework, recently advanced by Goodfriend (2002) and Goodfriend and King (2000). Based on the NNS setup, we discuss the inflationary consequences of the catching-up process in a heterogeneous monetary union. In particular, we explore the interaction between catching-up and inflation differentials and offer an interpretation of the nature of this interaction. Our discussion is in stark contrast to the conventional Balassa-Samuelson (BS) interpretation. In particular, we demonstrate that divergent inflation rates between Member States do not necessarily have to be an equilibrium phenomenon, even if the original shock comes from the supply-side of the economy. Second, we show how a centralized monetary policy may produce such divergence of individual country's inflation rates when countries differ in size and in trend productivity growth. Against this background, we additionally show how the catching may potentially lead to unsustainable credit booms in a catching-up member country. Finally, we indicate some important deficiencies of the BS model as a guide to short- and medium-run policy making analysis.
Author: Filippo Altissimo Publisher: ISBN: Category : Consumer price indexes Languages : en Pages : 50
Book Description
"This paper analyzes the long-run determinants of inflation differentials in a monetary union. First, we aim at establishingsome stylized facts relating the regional dispersion in headline inflation rates in the euro area as well as in the main components of the consumer price index. We find that a relatively large proportion of it occurs in the Service category of the EU's harmonized consumer price index (HICP). We then lay out a model of a monetary union with fully flexible prices, the long-run properties of which are analyzed. Our model departs in several respect from the Balassa-Samuelson hypotheses. Our results are in contrast with the result that movements in the real exchange rate are mainly driven by regionally asymmetric productivity shocks in the traded sectors. Our results point instead to relative variations in productivity in the non-traded sector as the primary cause of price and inflation differentials, with shocks to productivity in the traded sector being largely absorbed by movements in the terms of trade in the regional economies. These shocks are also found to largely drive the variability of real wages at the country level"--National Bureau of Economic Research web site.
Author: R. Matousek Publisher: Springer ISBN: 0230302211 Category : Business & Economics Languages : en Pages : 299
Book Description
This book provides a deep insight into the market changes and policy challenges that transition economies have undergone in the last twenty years. It not only comments on and evaluates the development of financial markets in transition economies, but also highlights the key obstacles to full integration of financial markets into the EU market.
Author: Mr.Jeffrey R. Franks Publisher: International Monetary Fund ISBN: 1484338499 Category : Business & Economics Languages : en Pages : 47
Book Description
We examine economic convergence among euro area countries on multiple dimensions. While there was nominal convergence of inflation and interest rates, real convergence of per capita income levels has not occurred among the original euro area members since the advent of the common currency. Income convergence stagnated in the early years of the common currency and has reversed in the wake of the global economic crisis. New euro area members, in contrast, have seen real income convergence. Business cycles became more synchronized, but the amplitude of those cycles diverged. Financial cycles showed a similar pattern: sychronizing more over time, but with divergent amplitudes. Income convergence requires reforms boosting productivity growth in lagging countries, while cyclical and financial convergence can be enhanced by measures to improve national and euro area fiscal policies, together with steps to deepen the single market.
Author: Michael Emerson Publisher: ISBN: 9780198773245 Category : Business & Economics Languages : en Pages : 356
Book Description
The European Community is negotiating a new treaty to establish the constitutional foundations of an economic and monetary union in the course of the 1990s. This study provides the only comprehensive guide to the economic implications of economic and monetary union. The work of an economist inside the Commission of the European Community, it reflects the considerations influencing the design of the union. The study creates a unique bridge between the insights of modern economic analysis and the work of the policy makers preparing for economic and monetary union.
Author: Ronald MacDonald
Author: Ronald MacDonald
Author: Ronald MacDonald
Author: Ronald MacDonald
Author: Filippo Altissimo
Author: 
Author: Nikolay Hristov
Author: 
Author: R. Matousek
Author: Mr.Jeffrey R. Franks
Author: Michael Emerson