. We use a microfounded New Keynesian model of a monetary union that incorporates persistence in inflation, and examine non …-cooperative interactions of fiscal and monetary authorities. We find that particularly when inflation is persistent, the use of fiscal policy …

features, such as the degree of centralization of wage bargaining, labour unions' inflation aversion and the degree of … monetary policy usually affects both inflation and unemployment, even when all structural parameters of the economy and of …

According to the Maastricht Treaty, EMS countries will be able to join EMU if their inflation rates are not more than 1 ….5% higher than the average of the three lowest inflation rates in the EMS. In this paper I analyse the likelihood of inflation … whether the Maastricht convergence requirement for inflation rates is not needlessly tight. …

game. Reciprocity induces a positive inflation bias and nominal fluctuations in the monetary union. …

stages of the Delors process will produce a central bank with little or no anti-inflation credibility. Here we make starkest …

employment in peripheral Europe could be restored by raising the Euro-area annual rate of inflation to about 4 percent for the …

monetary union. There is an incentive to use a surprise inflation tax to wipe out the real value of government debt and wage … monetary union with a non-cooperative or cooperative central bank. This case is stronger when the aversion to inflation is high … is little indexation. Even if all contracts are indexed, there is an incentive to create unanticipated inflation if money …

model for a currency union in which labour markets are heterogenous and where the monetary policy targets expected inflation …. More flexibility in adjustment means more stable aggregate output, but inflation control becomes more difficult … aggregate shocks both for the variability of aggregate output and inflation. Considering the effects on country specific output …

nominal and real wage rigidity) and social preferences regarding inflation, employment, and real wages. We also calibrate our …