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Macroeconomic convergence is critical for member states to achieve the level of harmonization required for establishing a stable and resilient monetary union. The East African Community (EAC) member states, therefore, established set targets for macroeconomic convergence, intending to eliminate...
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Evidence suggests there is a strong tendency among states to choose fixed exchange rates. Yet he interpretation of fixed exchange rates as a monetary policy rule remains unconvincing. Adopting an endogenous policy perspective, this paper argues that political-support maximizing governments...
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), the problem of instability is simply transferred to inflation rate differentials, what we call the (impossibility of the …) "uncovered inflation rate parity condition" in a monetary union. The analysis of the actual divergences and imbalances in the EMU …, then, suggests that failure to respect the "uncovered inflation rate parity condition" in a monetary union may lead to …
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