This paper takes a first step in analysing how a monetary union performs in the presence of labour market asymmetries. Differences in wage flexibility, market power and country sizes are allowed for in a setting with both country-specific and aggregate shocks. The implications of asymmetries for...

Several countries at the core of the Euro area have experienced coincident business cycles during the most recent decades, while the Danish economy seemed detached from these cycles during the 1980's and part of the 1990's. To a large degree, the decoupling of the Danish economy reflects...