This paper examines a continuous-time two country dynamic monetary equilibrium in which countries with possible heterogeneous tastes and endowments hold their own money for the purpose of transaction services formulated via the money in the utility function. Given a price system, no-arbitrage...

This paper examines price and inflation convergence between three European countries (Italy, Spain and the UK) and a European idiosyncratic average and, alternatively, between them and Germany since the beginning of the 80's.