This paper examines the extent to which the confrontation between the authorities implementing the monetary policy and the private agents asking for foreign currencies can influence the global process of currency substitution. The choice of an appropriate monetary policy depends on an original...

There are many papers written on how price and wage rigidity can cause monetary policy to generate real effects on the economy. In those that incorporate open-economy considerations, monetary changes in one country also has an impact on other economies. In this paper, an attempt is made to add...

We augment the standard two country, two-commodity and two-factor trade model by allowing for money to exist as an additional asset. We find that it is possi - ble for an increase in the domestic tariff to worsen the terms of trade if the importable sector is severely distorted by the existence...

This paper studies the applicability of the Marshall-Lerner condition to the “basic” Obstfeld and Rogoff (1995) model. It shows that the Marshall-Lerner condition does apply to this class of models with homothetic preferences when product differentiation across countries is imposed. This...

This paper examines the monetary transmission mechanism in six EU member states. It provides useful empirical evidence for assessing the impact of a common monetary policy in the early stages of EMU, and enables us to form a view on how the regime change represented by EMU is likely to be...

The debate over monetary standards and exchange rate regimes for developing countries is as wide open as ever. On the one hand, the big selling points of floating exchange rates-monetary independence and accommodation of terms of trade shocks-have not lived up to their promise. On the other...

The impact of the creation of a monetary union on structural convergence among member countries remains an open question. A model of monetary union is presented in which national nominal wage flexibility is endogenous and may vary across countries. We use wage indexation as a proxy for nominal...

Traditional economic integration theory states that the formation of and economic union will effect both the member and non-member countries. This paper adds to traditional theory on economic integration by studying how non-member countries carry out their monetary policy in order tp counter...

Since the inception of EMU, a common concern is that European monetary policy may have differential effects on EMU member countries. However, the reliance on cross-country evidence in the empirical literature risks overemphasizing the importance of cross-country differences in monetary...

This paper examines synchronization in the euro area and the role of intra-EMU trade from 1981 to 2011, focusing in particular on southern European countries. The results indicate that the intensification of synchronisation that occurred in the nineties across almost all countries could...