Monetary Integration, Stochastic Inflation Preferences and the Value of Waiting
AbstractUsing a simple two-country model where policymakers minimize the continuous-time equivalence of a Barro-Gordon-type loss function over inflation, we examine the value of the option to give up monetary independence in favor of monetary integration when the national preference parameters associated with a inflationary surprise follow correlated geometric Brownian motions.
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Bibliographic InfoPaper provided by Department of Economics, University of Birmingham in its series Discussion Papers with number 99-06.
Length: 16 pages
Date of creation: 1999
Date of revision:
Find related papers by JEL classification:
- E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
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- Strobel, F., 1999.
"When to Leave a Monetary Union: Now or Later?,"
99-23, Department of Economics, University of Birmingham.
- Frank Strobel, 2000. "When to Leave a Monetary Union: Now or Later?," Econometric Society World Congress 2000 Contributed Papers 0961, Econometric Society.
- de Brito, José Brandão & de Mello Sampayo, Felipa, 2002. "The timing and the probability of FDI: an application to the US multinational enterprises," 10th International Conference on Panel Data, Berlin, July 5-6, 2002 A3-4, International Conferences on Panel Data.
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