Advanced Search
MyIDEAS: Login to save this article or follow this journal

Interest rate decisions in an asymmetric monetary union

Contents:

Author Info

  • Matsen, Egil
  • Roisland, Oistein

Abstract

Decision rules matter for monetary policy in a currency union if the interest rate affects member states differently. We examine the consequences for inflation, output and interest rate fluctuations and the welfare loss of four alternative types of decision procedures. We show that the alternative decision rules have very dissimilar properties and that different rules favour different types of countries. In addition to asymmetric transmission mechanisms, we consider asymmetric shocks. We show that it is the combination of a country’s interest rate elasticity and the covariance between the shocks to the country and the shocks to the union that determines which decision rule the country would favour.

(This abstract was borrowed from another version of this item.)

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.sciencedirect.com/science/article/B6V97-4DWH40M-1/2/84dd1bb18449c3353ae3b811e7d28d9f
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Elsevier in its journal European Journal of Political Economy.

Volume (Year): 21 (2005)
Issue (Month): 2 (June)
Pages: 365-384

as in new window
Handle: RePEc:eee:poleco:v:21:y:2005:i:2:p:365-384

Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/505544

Related research

Keywords:

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Kiminori Matsuyama, 1991. "Agricultural Productivity, Comparative Advantage and Economic Growth," NBER Working Papers 3606, National Bureau of Economic Research, Inc.
  2. Sachs, Jeffrey D. & Warner, Andrew M., 2001. "The curse of natural resources," European Economic Review, Elsevier, Elsevier, vol. 45(4-6), pages 827-838, May.
  3. Corden, W M, 1984. "Booming Sector and Dutch Disease Economics: Survey and Consolidation," Oxford Economic Papers, Oxford University Press, vol. 36(3), pages 359-80, November.
  4. Svensson, Lars E.O., 1998. "Inflation Targeting as a Monetary Policy Rule," Seminar Papers, Stockholm University, Institute for International Economic Studies 646, Stockholm University, Institute for International Economic Studies.
  5. Alan S. Blinder & John Morgan, 2001. "Are Two Heads Better Than One?: An Experimental Analysis of Group vs. Individual Decisionmaking," Working Papers, Princeton University, Department of Economics, Center for Economic Policy Studies. 130, Princeton University, Department of Economics, Center for Economic Policy Studies..
  6. von Hagen, Jurgen & Suppel, Ralph, 1994. "Central bank constitutions for federal monetary unions," European Economic Review, Elsevier, Elsevier, vol. 38(3-4), pages 774-782, April.
  7. repec:fth:stanho:e-92-3 is not listed on IDEAS
  8. De Grauwe, Paul & Piskorski, Tomasz, 2001. "Union-wide Aggregates versus National Data Based Monetary Policies: Does it Matter for the Eurosystem?," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3036, C.E.P.R. Discussion Papers.
  9. Stijns, Jean-Philippe C., 2001. "Natural Resource Abundance And Economic Growth Revisited," Berkeley Economics Dissertations-in-Progress Series, University of California, Berkeley, Department of Agricultural and Resource Economics 25127, University of California, Berkeley, Department of Agricultural and Resource Economics.
  10. Daniel Gros & Carsten Hefeker, 2002. "Common Monetary Policy with Asymmetric Shocks," CESifo Working Paper Series 705, CESifo Group Munich.
  11. Henrik Jensen, . "Targeting Nominal Income Growth or Inflation?," EPRU Working Paper Series, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics 99-23, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
  12. Nolan, Charles, 2002. "Monetary Stabilisation Policy in a Monetary Union: Some Simple Analytics," Scottish Journal of Political Economy, Scottish Economic Society, vol. 49(2), pages 196-215, May.
  13. Halvor Mehlum & Karl Moene & Ragnar Torvik, 2004. "Institutions and the Resource Curse," DEGIT Conference Papers, DEGIT, Dynamics, Economic Growth, and International Trade c009_012, DEGIT, Dynamics, Economic Growth, and International Trade.
  14. Lant Pritchett & Michael Woolcock & Gwen Busby & Jonathan Isham, 2004. "The Varieties of Resource Experience: How Natural Resource Export Structures Affect the Political Economy of Economic Growth," Middlebury College Working Paper Series, Middlebury College, Department of Economics 0308r, Middlebury College, Department of Economics.
  15. Torvik, Ragnar, 2001. "Learning by doing and the Dutch disease," European Economic Review, Elsevier, Elsevier, vol. 45(2), pages 285-306, February.
  16. Neary, Peter J & Purvis, Douglas D, 1981. "Real Adjustment and Exchange-rate Dynamics," The Warwick Economics Research Paper Series (TWERPS) 203, University of Warwick, Department of Economics.
  17. Baland, Jean-Marie & Francois, Patrick, 2000. "Rent-seeking and resource booms," Journal of Development Economics, Elsevier, Elsevier, vol. 61(2), pages 527-542, April.
  18. Rudebusch, Glenn D & Svensson, Lars E O, 1998. "Policy Rules for Inflation Targeting," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1999, C.E.P.R. Discussion Papers.
  19. Torvik, Ragnar, 2002. "Natural resources, rent seeking and welfare," Journal of Development Economics, Elsevier, Elsevier, vol. 67(2), pages 455-470, April.
  20. Krugman, Paul, 1987. "The narrow moving band, the Dutch disease, and the competitive consequences of Mrs. Thatcher : Notes on trade in the presence of dynamic scale economies," Journal of Development Economics, Elsevier, Elsevier, vol. 27(1-2), pages 41-55, October.
  21. Michael Ehrmann & Leonardo Gambacorta & Jorge Martinez-PagÈs & Patrick Sevestre & Andreas Worms, 2003. "The Effects of Monetary Policy in the Euro Area," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 19(1), pages 58-72.
  22. Corden, W Max & Neary, J Peter, 1982. "Booming Sector and De-Industrialisation in a Small Open Economy," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 92(368), pages 825-48, December.
  23. Robinson, James A & Torvik, Ragnar & Verdier, Thierry, 2002. "Political Foundations of the Resource Curse," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3422, C.E.P.R. Discussion Papers.
  24. Lane, Philip R & Tornell, Aaron, 1996. " Power, Growth, and the Voracity Effect," Journal of Economic Growth, Springer, Springer, vol. 1(2), pages 213-41, June.
  25. Sachs, J-D & Warner, A-M, 1995. "Natural Resource Abundance and Economic Growth," Papers, Harvard - Institute for International Development 517a, Harvard - Institute for International Development.
  26. Richard Clarida & Jordi Gali & Mark Gertler, 2001. "Optimal Monetary Policy in Open versus Closed Economies: An Integrated Approach," American Economic Review, American Economic Association, American Economic Association, vol. 91(2), pages 248-252, May.
  27. Daniel Gros & Carsten Hefeker, 2002. "One Size Must Fit All: National Divergences in a Monetary Union," German Economic Review, Verein für Socialpolitik, Verein für Socialpolitik, vol. 3(3), pages 247-262, 08.
  28. Sachs, Jeffrey D & Warner, Andrew M, 1997. "Sources of Slow Growth in African Economies," Journal of African Economies, Centre for the Study of African Economies (CSAE), Centre for the Study of African Economies (CSAE), vol. 6(3), pages 335-76, October.
  29. Gerald Carlino & Robert Defina, 1998. "The Differential Regional Effects Of Monetary Policy," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 572-587, November.
  30. Galí, Jordi & Monacelli, Tommaso, 2002. "Monetary Policy and Exchange Rate Volatility in a Small Open Economy," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3346, C.E.P.R. Discussion Papers.
  31. Philip R. Lane & Aaron Tornell, 1999. "The Voracity Effect," American Economic Review, American Economic Association, American Economic Association, vol. 89(1), pages 22-46, March.
  32. Aksoy, Yunus & De Grauwe, Paul & Dewachter, Hans, 2002. "Do asymmetries matter for European monetary policy?," European Economic Review, Elsevier, Elsevier, vol. 46(3), pages 443-469, March.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:eee:poleco:v:21:y:2005:i:2:p:365-384. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.