IDEAS home Printed from https://ideas.repec.org/h/spr/sprchp/978-3-540-92751-8_29.html
   My bibliography  Save this book chapter

Result

In: Strategic Policy Interactions in a Monetary Union

Author

Listed:
  • Michael Carlberg

    (Federal University of Hamburg)

Abstract

The targets of the European central bank are zero inflation in Germany and France. The instrument of the European central bank is European money supply. We assume that the European central bank has a quadratic loss function. The amount of loss depends on inflation in Germany and France. The European central bank sets European money supply so as to minimize its loss. The firstorder condition for a minimum loss gives the reaction function of the European central bank. Suppose the German government raises German government purchases. Then, as a response, the European central bank lowers European money supply. The target of the German government is zero unemployment in Germany. The instrument of the German government is German government purchases. We assume that the German government has a quadratic loss function. The amount of loss depends on unemployment in Germany. The German government sets German government purchases so as to minimize its loss. The first-order condition for a minimum loss gives the reaction function of the German government. Suppose the European central bank lowers European money supply. Then, as a response, the German government raises German government purchases.

Suggested Citation

  • Michael Carlberg, 2009. "Result," Springer Books, in: Strategic Policy Interactions in a Monetary Union, chapter 29, pages 1-5, Springer.
    • Handle: RePEc:spr:sprchp:978-3-540-92751-8_29
    DOI: 10.1007/978-3-540-92751-8_29
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:sprchp:978-3-540-92751-8_29. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.