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| Author: | Sibert, A. |
| Title: | Monetary integration and economic reform |
| Journal: | Economic Journal
1999 : JAN, VOL. 109:452, p. 78-92 |
| Index terms: | Economic theory Policy making Monetary policy Economic integration Europe |
| Freeterms: | Economic reform |
| Language: | eng |
| Abstract: | Recent research in contract theory views ownership as substitute for complete contracts. This approach is applied to monetary integration. Countries face a coordination problem conducting monetary policy. Negative spill-overs ensure uncoordinated policy generates too high inflation. Ex ante, policy makers can undertake politically costly economic reform. This has positive spill-over because it improves the outcome of the monetary policy game. Ex-post contracting over policy may be possible, but it supposed that ex-ante contracting over reform and policy is not. It is analyzed when monetary union is a good substitute for this inability to commit. |
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