Choosing the Regime in an Uncertain World: The UK and Monetary Union
AbstractThe UK has to take a decision on EMU membership at some point, and the costs and benefits have to be evaluated. Different policy frameworks result in differing outcomes for the means and variances of economic variables such as inflation, output, and nominal and real exchange rates and interest rates. Changing the level of uncertainty in the economy may change the equilibrium level of output and investment. Hence membership of EMU has to be evaluated in the light of its impact on the volatility of target variables and on the impact of volatility on the level of output and welfare. In this paper we discuss a theoretical framework within which we can discuss these issues, and we undertake stochastic simulation on a large, New Keynesian model including all the European economies in order to evaluate the effects of membership on the level and volatility of output. Our experiments suggest that membership of EMU would reduce volatility and as a result raise the sustainable level of output and employment in the UK.
Download InfoIf 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.
Bibliographic InfoPaper provided by National Institute of Economic and Social Research in its series NIESR Discussion Papers with number 209.
Date of creation: Feb 2003
Date of revision:
Contact details of provider:
Postal: 2 Dean Trench Street Smith Square London SW1P 3HE
Web page: http://niesr.ac.uk
Other versions of this item:
- Barrell, Ray & Ian Hurst & Tatiana Kirsanova, 2003. "Choosing the Regime in an Uncertain World, the UK and Monetary Union," Royal Economic Society Annual Conference 2003 16, Royal Economic Society.
- F3 - International Economics - - International Finance
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
- E47 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Forecasting and Simulation: Models and Applications
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-03-10 (All new papers)
- NEP-EEC-2003-03-10 (European Economics)
- NEP-IFN-2003-03-10 (International Finance)
- NEP-MAC-2003-03-10 (Macroeconomics)
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral 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: (Communications Manager).
If references are entirely missing, you can add them using this form.