Optimal stabilisation policy in a monetary union: implications of the Mankiw-Weinzierl model
by Georgios Karras
International Journal of Monetary Economics and Finance (IJMEF), Vol. 5, No. 2, 2012

Abstract: This paper uses the Mankiw and Weinzierl (2011) general equilibrium model of optimal stabilisation policy to ask how macroeconomic outcomes are affected by membership in a monetary union. The model agrees with much of the previous literature that the effects of various shocks may be amplified or dampened depending on how the common central bank responds, or fails to respond, to them. This in turn depends on how well (or poorly) correlated the domestic shocks are with their union-wide counterparts. For example, a negative spending shock will be the most recessionary when the shock is confined to the domestic economy, much less (if at all) recessionary when the shock is union wide, and actually expansionary if the shock is restricted to the rest of the union. Fiscal and productivity shocks are characterised by similar properties.

Online publication date: Tue, 28-Aug-2012

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

 
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Monetary Economics and Finance (IJMEF):
Login with your Inderscience username and password:

Username:        Password:          Forgotten your password?

Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email subs@inderscience.com