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| Tekijä: | Cooley, T. F. Quadrini, V. |
| Otsikko: | Common currencies vs. monetary independence |
| Lehti: | Review of Economic Studies
2003 : VOL. 70:4(245), p. 785-806 |
| Asiasana: | Monetary policy EMU Currency |
| Kieli: | eng |
| Tiivistelmä: | The authors study the optimal monetary policy in a two-country open-economy under two monetary arrangements (a) multiple currencies controlled by independent policy makers; (b) common currencies with a centralized policy maker. Their findings suggest that (1) monetary policy competition leads to higher long-term inflation and interest rates with large welfare losses; (2) the inflation bias and the consequent losses are larger when countries are unable to commit future policies; (3) the welfare losses from higher long-term inflation dominates the welfare costs of losing the ability to reach optimally to shocks. |
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