This paper studies monetary regime choice between monetary union and flexible exchange rate regime in a large open economy framework. The classical approach emphasizes that monetary unions are inherently costly because a single interest rate cannot respond effectively to different shocks of...

We formulate an optimizing-agent model in which both labor and product markets exhibit monopolistic competition and staggered nominal contracts. The unconditional expectation of average household utility can be expressed in terms of the unconditional variances of the output gap, price inflation,...

Externe Effekte zwischen Wirtschaftssubjekten spielen in der Ökonomie eine herausragende Rolle. Solche durch wirtschaftliche Aktivität verursachten Externalitäten wirken auf das Wohlfahrtsniveau Dritter ein, ohne daß dafür eine marktliche Kompensation erfolgen würde. Die vorliegende...