Macroeconomic Analysis of Monetary Unions A General Framework Based on the Mundell-Fleming Model /

• Main Authors: Bajo-Rubio, Oscar (Author), Díaz-Roldán, Carmen (Author)
• Corporate Author: SpringerLink (Online service)
• Format: Electronic eBook
• Language: English
• Published: Berlin, Heidelberg : Springer Berlin Heidelberg : Imprint: Springer, 2011.
• Series: SpringerBriefs in Economics,
• Subjects: Economic theory.; Macroeconomics.; International economics.; Economics.; Economic Theory/Quantitative Economics/Mathematical Methods.; Macroeconomics/Monetary Economics//Financial Economics.; International Economics.
• Physical Description: VII, 50 p. online resource.
• ISBN: 9783642194450
• ISSN: 2191-5504

The book develops a general framework for the macroeconomic modeling of monetary unions. The starting point of the analysis is the standard two-country Mundell-Fleming model with perfect capital mobility, extended to incorporate the supply side in a context of rigid real wages, and modified so that the money market is common for two countries forming a monetary union. The model is presented in two versions: for a small and a large monetary union, respectively. After solving each model, the authors derive multipliers for monetary, expenditure, supply, and external shocks, both in the short and the long run; a graphical analysis is also provided. Special attention is paid to the crucial distinction between symmetric and asymmetric shocks.