Macroeconomics of Monetary Union

This book, unlike other books, provides readers with a practical yet sophisticated grasp of the macroeconomic principles necessary to understand a monetary union. By definition, a monetary union is a group of countries that share a common currency. The most important case in point is the euro area. Policy makers are the central bank, national governments, and national labour unions. Policy targets are price stability and full employment. Policy makers follow cold-turkey or gradualist strategies. Policy decisions are taken sequentially or simultaneously. The countries can differ in size or behaviour. Policy expectations are adaptive or rational. To illustrate all of this there are numerical simulations of monetary policy, fiscal policy, and wage policy. The present book is part of a larger research project on European Monetary Union, see the references given at the back of the book. Some parts of this project were presented at the World Congress of the International Economic Association, at the International Conference on Macroeconomic Analysis, at the International Institute of Public Finance, and at the International Atlantic Economic Conference. Other parts were presented at the Macro Study Group of the German Economic Association, at the Annual Meeting of the Austrian Economic Association, at the Gottingen Workshop on International Economics, at the Halle Workshop on Monetary Economics, at the Research Seminar on Macroeconomics in Freiburg, at the Research Seminar on Economics in Kassel, and at the Passau Workshop on International Economics.

This book, unlike other books, provides readers with a practical yet sophisticated grasp of the macroeconomic principles necessary to understand a monetary union. By definition, a monetary union is a group of countries that share a common currency. The most important case in point is the euro area. Policy makers are the central bank, national governments, and national labour unions. Policy targets are price stability and full employment. Policy makers follow cold-turkey or gradualist strategies. Policy decisions are taken sequentially or simultaneously. The countries can differ in size or behaviour. Policy expectations are adaptive or rational. To illustrate all of this there are numerical simulations of monetary policy, fiscal policy, and wage policy. The present book is part of a larger research project on European Monetary Union, see the references given at the back of the book. Some parts of this project were presented at the World Congress of the International Economic Association, at the International Conference on Macroeconomic Analysis, at the International Institute of Public Finance, and at the International Atlantic Economic Conference. Other parts were presented at the Macro Study Group of the German Economic Association, at the Annual Meeting of the Austrian Economic Association, at the Gottingen Workshop on International Economics, at the Halle Workshop on Monetary Economics, at the Research Seminar on Macroeconomics in Freiburg, at the Research Seminar on Economics in Kassel, and at the Passau Workshop on International Economics.

Introduction.- Monetary and Fiscal Policies: Basic Models: Monetary Policy in Europe.- Fiscal Policies in Germany and France.- Competition between European Central Bank, German Government, and French Government.- Cooperation between European Central Bank, German Government, and French Government.- Monetary and Fiscal Policies: Intermediate Models: Simultaneous Decisions: Cold-Turkey Policies.- Simultaneous Decisions: Gradualist Policies.- Fiscal Shocks in Germany.- The Countries Differ in Size.- The Countries Differ in Behaviour.- Rational Policy Expectations.- Monetary and Fiscal Policies: The Case of Three Countries: Monetary Policy in Europe.- Fiscal Policies in Germany, France and Italy.- Monetary and Fiscal Competition.- Monetary and Fiscal Cooperation.- Monetary and Wage Policies: Basic Models: Wage Policies in Germany and France.- Competition between European Central Bank, German Labour Union, and French Labour Union.- Cooperation between European Central Bank, German Labour Union, and French Labour Union.- Monetary and Wage Policies: Intermediate Models.- Monetary and Wage Policies: The Case of Three Countries.- Monetary, Fiscal and Wage Policies.