Monetary union can benefit countries suffering from policy credibility problems if it eliminates the inflation bias and also allows for more efficient management of certain shocks. But it also carries costs as some stabilization may be feasible even in the absence of credibility, and this may be...

under which such a monetary policy intervention is socially desirable.

In this paper we look for interest rate rules ensuring strong local equilibrium determinacy,i.e. making sure that there is a unique equilibrium starting out in the neighbourhood of thesteady state and that this equilibrium remains constantly in that neighbourhood. We showin a general framework...