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We present a two-country New Open Economy Macroeconomics model of a currency union featuring an overlapping generations structure of the Blanchard (1985)-Yaari (1965) type as well as monopolistic frictions and staggered adjustment in the goods and labor market. We allow for public investment and...
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, Germany, Italy and Spain) using a large Bayesian vector autoregressive model with endogenous prior selection. Drawing both on …, while the decline in the price level is weaker in Germany. Bond yields rise more strongly and more persistently in France … and Germany than in Italy and Spain. …
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