This paper studies the welfare impact of a common monetary policy in the context of a two-country, general equilibrium model with liquidity effect and nominal wage contracts, heterogeneous agents, imperfect competition in the labor market, trade in goods, immobility of labor and mobility of...

The paper evaluates the costs and benefits of a single currency area within a unified framework. Conventionally, it is argued that a single currency area carries a welfare loss owing to the sacrifice of exchange rate adjustment in the presence of country-specific shocks. But in 1973 Mundell...

The Economic Monetary Union (EMU) was not only politically but also economically a novel experiment. Starting in 2008-09, the EMU has been experiencing the economic crisis, giving rise to the political, economic and academic debate on the desirability of making or breaking the Union. This study...

This book explores the new economics of monetary union. It carefully discusses the effects of shocks and policies on output and prices. Shocks and policies are country-specific or common. They occur on the demand or supply side. Countries can differ in behavioural functions. Wages can be fixed,...