Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/153064
Authors: 
Sánchez, Marcelo
Year of Publication: 
2006
Series/Report no.: 
ECB Working Paper 630
Abstract: 
We examine the implications of monetary union for macroeconomic stabilisation in catching up participating countries. We allow member states’supply conditions to differ inside the union, especially with regard to sectoral characteristics. Sectoral productivity shocks on balance hamper the stabilisation properties of a currency union. In the face of aggregate supply disturbances, the stabilisation costs of renouncing monetary autonomy diminish with a flatter output-inflation tradeoff and - barring idiosyncratic shocks - with a larger reference country size, more homogeneous supply slopes and a higher preference for price stability.
Subjects: 
Balassa-Samuelson Effect
Exchange Rates
monetary union
price stability
JEL: 
E52
E58
F33
F40
Document Type: 
Working Paper

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