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In this paper, we study the optimal mix of monetary and macroprudential policies in an estimated two-country model of the euro area. The model includes real, nominal and financial frictions, and hence both monetary and macroprudential policy can play a role. We find that the introduction of a...
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This paper evaluates the role of trade and financial linkages in the decision to enter a monetary union. We estimate a two-country DSGE model for the U.K. economy and the euro area, and use the model to compute the welfare trade-offs from joining the euro. We evaluate two alternative scenarios....
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EMU's design is seriously flawed. Monetary union was established without political union, creating a single eurozone …. Its exceptionally independent central bank, the ECB, sets monetary policy for the eurozone economy as a whole, but it has … no institutions for setting a eurozone-wide fiscal policy, and hence no democratically accountable structure for setting …
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The creation of EMU raises the question whether the common monetary policy has the same impact in all member countries. We analyse the convergence of interest rates in four major EMU countries from 1999 to 2007. We suggest to test the convergence of the interest rates with the full term...
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