This modified version of Salop's (1979) spatial competition model yields clear-cut predictions about the effects of exchange rate shocks on market structure and pass-through. Shocks within the band of inaction do not affect market structure. The upper bound of this range rises as the industry...

In this paper we analyze the effects of different decision rules in the ECB on monetary stability. We consider a model where asymmetric shocks and divergent propagation of shocks on output and inflation are potential causes of tensions within the ECB concerning the conduct of monetary (interest...

This paper extends the framework provided by De Grauwe, Dewachter and Aksoy (1998). Monetary policy effectiveness of the European Central Bank (ECB) in the open economy Euroland is addressed. The optimal feedback rules for the member states with the use of the backward looking variables are...

Recent empirical research has found that the strong short-term relationship between US monetary aggregates and macroeconomic fundamentals, as outlined in the classical study of M. Friedman and Schwartz, mostly disappeared since the early 1980s. In the light of B. Friedman and Kuttner (1992)...

In this paper we compare the stabilizing properties of the EMU to those of a ERM system, controlled by Germany. We find that in general the EMU will provide better stabilization of inflation, output and the interest rate than the EMS system. However, these results only apply if the ECB can...