When to Leave a Monetary Union: Now or Later?
AbstractUsing a two-country model of monetary union where policymakers minimize the continuous-time equivalent of a Barro-Gordon-type loss function, we examine the value of the option of monetary break-up when the national preference parameters associated with an 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 99-23.
Length: 11 pages
Date of creation: 1999
Date of revision:
MONETARY UNION ; INFLATION ; MONEY;
Other versions of this item:
- Frank Strobel, 2000. "When to Leave a Monetary Union: Now or Later?," Econometric Society World Congress 2000 Contributed Papers 0961, Econometric Society.
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
- F3 - International Economics - - International Finance
- E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
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.:
- Strobel, F., 1999. "Monetary Integration, Stochastic Inflation Preferences and the Value of Waiting," Discussion Papers 99-06, Department of Economics, University of Birmingham.
- Pindyck, Robert S., 1990.
"Irreversibility, uncertainty, and investment,"
3137-90., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Barro, Robert J. & Gordon, David B., 1983.
"Rules, discretion and reputation in a model of monetary policy,"
Journal of Monetary Economics,
Elsevier, vol. 12(1), pages 101-121.
- Robert J. Barro & David B. Gordon, 1984. "Rules, Discretion and Reputation in a Model of Monetary Policy," NBER Working Papers 1079, National Bureau of Economic Research, Inc.
- Avinash Dixit, 1992. "Investment and Hysteresis," Journal of Economic Perspectives, American Economic Association, vol. 6(1), pages 107-132, Winter.
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