The purpose of the paper is to present a tractable model of an old topic which is becoming more important in macroeconomics: the link between financial structure and economic activity.

This paper investigates the dynamic effects of monetary and fiscal policy in a monetary union, which is characterized by asymmetric interest rate transmission. This asymmetry gives rise to intertemporal reversals in the relative effectiveness of policy on member country outputs. The direction...

Historically, informedness of economic agents via price stability has been a rationale for the money supply rule derived from the Quantity Theory of Money. The monetarists maintain that changes in the price level are attributable to the level of the money supply; hence, a money supply rule is...