In a monetary union, inflation rate differentials may be substantial over the business cycle. This paper parameterizes a two-country monetary union in which different economic structures in the two countries generate temporary inflation differentials. Cross-country differences are introduced in...

In a monetary union, inflation rate differentials may be substantial over the business cycle. This paper parameterizes a monetary union with cross-country structural differences in (i) the elasticity of demand in the goods markets, (ii) the degree of price inertia and (iii) the preference for...

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