Carlberg Inflation and Unemployment in a Monetary Union

1. Auflage 2008
ISBN: 978-3-540-79301-4
Verlag: Springer-Verlag
Format: PDF
Kopierschutz: Adobe DRM (»Systemvoraussetzungen)

E-Book, Englisch, 243 Seiten

This book studies the coexistence of inflation and unemployment in a monetary union. The focus is on how to reduce the associated loss. The primary target of the European central bank is low inflation in Europe. The primary target of the German government is low unemployment in Germany. And the primary target of the French government is low unemployment in France. The European central bank has a quadratic loss function. The same applies to the German government and the French government. The key questions are: To what extent can the sequential process of monetary and fiscal decisions reduce the loss caused by inflation and unemployment? Is monetary and fiscal cooperation superior to the sequential process of monetary and fiscal decisions? The present book is part of a larger research project on European Monetary Union, see the references given at the back of the book. Some parts of this project were presented at the World Congress of the International Economic Association, at the International Conference on Macroeconomic Analysis, at the International Institute of Public Finance, and at the International Atlantic Economic Conference. Other parts were presented at the Macro Study Group of the German Economic Association, at the Annual Meeting of the Austrian Economic Association, at the Göttingen Workshop on International Economics, at the Halle Workshop on Monetary Economics, at the Research Seminar on Macroeconomics in Freiburg, at the Research Seminar on Economics in Kassel, and at the Passau Workshop on International Economics.

Autoren/Hrsg.

Carlberg, Michael

Inhaltsverzeichnis

1;Preface;5
2;Executive Summary;7
3;Contents in Brief;9
4;Contents;11
5;Introduction;16
5.1;1. Subject and Approach;16
5.2;2. The Monetary Union as a Whole;17
5.3;3. The Monetary Union of Two Countries;18
5.3.1;3.1. Monetary Policy in Europe;18
5.3.2;3.2. Fiscal Policies in Germany and France;19
5.3.3;3.3. Central Bank and Governments Decide Sequentially;20
5.3.4;3.4. Central Bank and Governments Cooperate;21
5.3.5;3.5. Central Bank and Governments Differ in Loss Function;22
6;Part One The Rate of Inflation;24
6.1;Chapter 1 Monetary Policy in Europe;26
6.1.1;1. The Model;26
6.1.2;2. Some Numerical Examples;29
6.2;Chapter 2 Fiscal Policies in Germany and France;34
6.2.1;1. The Model;34
6.2.2;2. A Numerical Example;37
6.3;Chapter 3 Central Bank and Governments Decide Sequentially;40
6.3.1;1. The Dynamic Model;40
6.3.2;2. Some Numerical Examples;43
6.4;Chapter 4 Central Bank and Governments Cooperate;47
6.4.1;1. The Model;47
6.4.2;2. Some Numerical Examples;49
6.5;Chapter 5 The Countries Differ in Size;52
6.6;Chapter 6 The Countries Differ in Behaviour;56
6.7;Chapter 7 The Monetary Union of Three Countries;60
7;Part Two The Rate of Unemployment;65
7.1;Chapter 1 Monetary Policy in Europe;66
7.1.1;1. The Model;66
7.1.2;2. Some Numerical Examples;69
7.2;Chapter 2 Fiscal Policies in Germany and France;74
7.2.1;1. The Model;74
7.2.2;2. A Numerical Example;77
7.3;Chapter 3 Central Bank and Governments Decide Sequentially;80
7.3.1;1. The Dynamic Model;80
7.3.2;2. Some Numerical Examples;83
7.4;Chapter 4 Central Bank and Governments Cooperate;87
7.4.1;1. The Model;87
7.4.2;2. Some Numerical Examples;89
7.5;Chapter 5 The Countries Differ in Size;92
7.6;Chapter 6 The Countries Differ in Behaviour;96
7.7;Chapter 7 The Monetary Union of Three Countries;100
8;Part Three Inflation and Unemployment The Monetary Union as a Whole;105
8.1;Chapter 1 The Model;106
8.1.1;1. The Model of Inflation and Unemployment;106
8.1.2;2. The Loss Function of the European Central Bank;107
8.1.3;3. Policy Model A;108
8.1.4;4. Policy Model B;109
8.1.5;5. Policy Model C;110
8.1.6;6. Policy Model D;111
8.2;Chapter 2 Some Numerical Examples;113
8.2.1;1. Weight of Inflation in Loss Function is 0.5;113
8.2.2;2. Weight of Inflation in Loss Function is 0.75;119
8.2.3;3. Weight of Inflation in Loss Function is 1;121
8.3;Chapter 3 Monetary Policy in the Phillips Curve Diagram;124
9;Part Four Inflation and Unemployment The Monetary Union of Two Countries;128
9.1;Chapter 1 Monetary Policy in Europe;130
9.1.1;1. The Model of Inflation and Unemployment;130
9.1.2;2. The Loss Function of the European Central Bank;132
9.1.3;3. The Policy Model;133
9.1.4;4. Another Version of the Policy Model;135
9.1.5;5. Some Numerical Examples;136
9.2;Chapter 2 Fiscal Policies in Germany and France;142
9.2.1;1. The Model of Inflation and Unemployment;142
9.2.2;2. The Loss Functions of National Governments;144
9.2.3;3. The Policy Model;145
9.2.4;4. Another Version of the Policy Model;147
9.2.5;5. Some Numerical Examples;148
9.3;Chapter 3 Central Bank and Governments Decide Sequentially;152
9.3.1;1. The Dynamic Model;152
9.3.2;2. Some Numerical Examples;156
9.4;Chapter 4 Central Bank and Governments Cooperate;166
9.4.1;1. The Model of Inflation and Unemployment;166
9.4.2;2. The Loss Function;167
9.4.3;3. The Policy Model;168
9.4.4;4. Another Version of the Policy Model;170
9.4.5;5. Some Numerical Examples;172
9.5;Chapter 5 Central Bank and Governments Differ in Loss Function;181
9.5.1;1. The Dynamic Model;181
9.5.2;2. Some Numerical Examples;183
9.6;Appendix Some Basic Models;190
9.6.1;1. Monetary Policy in Europe;190
9.6.2;2. Fiscal Policies in Germany and France;195
9.6.3;3. Central Bank and Governments Decide Sequentially;198
9.6.4;4. Central Bank and Governments Cooperate;205
9.7;Conclusion;212
9.7.1;1. The Monetary Union as a Whole;212
9.7.2;2. The Monetary Union of Two Countries 2.1. Monetary Policy in Europe;215
9.7.3;2.2. Fiscal Policies in Germany and France;218
9.7.4;2.3. Central Bank and Governments Decide Sequentially;219
9.7.5;2.4. Central Bank and Governments Cooperate;224
9.7.6;2.5. Central Bank and Governments Differ in Loss Function;228
9.8;Result;232
9.8.1;1. Monetary Policy in Europe;232
9.8.2;2. Fiscal Policies in Germany and France;233
9.8.3;3. Central Bank and Governments Decide Sequentially;234
9.8.4;4. Central Bank and Governments Cooperate;236
10;The Current Research Project;240
11;References;244