The uncovered interest rate parity condition lies at the heart of the "impossible trinity", stating that the three objectives of fixed exchange rates, free capital flows, and independent monetary policy cannot be pursued simultaneously. We argue that although monetary unification does indeed...

"This Chapter deals with the steps of the European construction and its structure. It also hints at the issues arising from an incomplete union. The foundations of European integration can be traced to issues raised immediately after WWII (Baldwin, Wyplosz, 2006). The central question was...

We challenge the widely held belief that New-Keynesian models cannot predict optimal positive inflation rates. In fact these are justi…fied by the Phelps argument that monetary fi…nancing can alleviate the burden of distortionary taxation. We obtain this result because, in contrast with...