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Accession to the Euro-Area: A Stylized Analysis Using a NK Model

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  • Van Aarle B.
  • Garretsen H.
  • Moons C.

Abstract

This paper analyses the accession to the Euro-Area by new members using a stylized new-Keynesian model. We analyze macro-economic adjustment in the pre- and post accession case and calculate welfare in both situations to obtain net benefit/loss from accession. It is shown how the effects of accession is related to the conduct of monetary policy and fiscal policy in the pre- and post accession case. The simulation examples point at the potential costs that accession might entail due its consequences on monetary and fiscal policy design. These consequences from accession in terms of macro-economic stabilization ability of monetary and fiscal policies have not always been fully acknowledged and need attention in our opinion.

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Bibliographic Info

Paper provided by University of Antwerp, Faculty of Applied Economics in its series Working Papers with number 2007015.

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Length: 27 pages
Date of creation: Jun 2007
Date of revision:
Handle: RePEc:ant:wpaper:2007015

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Postal: Prinsstraat 13, B-2000 Antwerpen
Web page: https://www.uantwerp.be/en/faculties/applied-economic-sciences/
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Cited by:
  1. Séverine Menguy, 2009. "Heterogeneity in Inflation Persistence and Monetary Policy in a Monetary Union," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 52(2), pages 121-141.

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