Inflation and Unemployment in a Monetary Union (eBook)

Preface 5
Executive Summary 7
Contents in Brief 9
Contents 11
Introduction 16
1. Subject and Approach 16
2. The Monetary Union as a Whole 17
3. The Monetary Union of Two Countries 18
3.1. Monetary Policy in Europe 18
3.2. Fiscal Policies in Germany and France 19
3.3. Central Bank and Governments Decide Sequentially 20
3.4. Central Bank and Governments Cooperate 21
3.5. Central Bank and Governments Differ in Loss Function 22
Part One The Rate of Inflation 24
Chapter 1 Monetary Policy in Europe 26
1. The Model 26
2. Some Numerical Examples 29
Chapter 2 Fiscal Policies in Germany and France 34
1. The Model 34
2. A Numerical Example 37
Chapter 3 Central Bank and Governments Decide Sequentially 40
1. The Dynamic Model 40
2. Some Numerical Examples 43
Chapter 4 Central Bank and Governments Cooperate 47
1. The Model 47
2. Some Numerical Examples 49
Chapter 5 The Countries Differ in Size 52
Chapter 6 The Countries Differ in Behaviour 56
Chapter 7 The Monetary Union of Three Countries 60
Part Two The Rate of Unemployment 65
Chapter 1 Monetary Policy in Europe 66
1. The Model 66
2. Some Numerical Examples 69
Chapter 2 Fiscal Policies in Germany and France 74
1. The Model 74
2. A Numerical Example 77
Chapter 3 Central Bank and Governments Decide Sequentially 80
1. The Dynamic Model 80
2. Some Numerical Examples 83
Chapter 4 Central Bank and Governments Cooperate 87
1. The Model 87
2. Some Numerical Examples 89
Chapter 5 The Countries Differ in Size 92
Chapter 6 The Countries Differ in Behaviour 96
Chapter 7 The Monetary Union of Three Countries 100
Part Three Inflation and Unemployment The Monetary Union as a Whole 105
Chapter 1 The Model 106
1. The Model of Inflation and Unemployment 106
2. The Loss Function of the European Central Bank 107
3. Policy Model A 108
4. Policy Model B 109
5. Policy Model C 110
6. Policy Model D 111
Chapter 2 Some Numerical Examples 113
1. Weight of Inflation in Loss Function is 0.5 113
2. Weight of Inflation in Loss Function is 0.75 119
3. Weight of Inflation in Loss Function is 1 121
Chapter 3 Monetary Policy in the Phillips Curve Diagram 124
Part Four Inflation and Unemployment The Monetary Union of Two Countries 128
Chapter 1 Monetary Policy in Europe 130
1. The Model of Inflation and Unemployment 130
2. The Loss Function of the European Central Bank 132
3. The Policy Model 133
4. Another Version of the Policy Model 135
5. Some Numerical Examples 136
Chapter 2 Fiscal Policies in Germany and France 142
1. The Model of Inflation and Unemployment 142
2. The Loss Functions of National Governments 144
3. The Policy Model 145
4. Another Version of the Policy Model 147
5. Some Numerical Examples 148
Chapter 3 Central Bank and Governments Decide Sequentially 152
1. The Dynamic Model 152
2. Some Numerical Examples 156
Chapter 4 Central Bank and Governments Cooperate 166
1. The Model of Inflation and Unemployment 166
2. The Loss Function 167
3. The Policy Model 168
4. Another Version of the Policy Model 170
5. Some Numerical Examples 172
Chapter 5 Central Bank and Governments Differ in Loss Function 181
1. The Dynamic Model 181
2. Some Numerical Examples 183
Appendix Some Basic Models 190
1. Monetary Policy in Europe 190
2. Fiscal Policies in Germany and France 195
3. Central Bank and Governments Decide Sequentially 198
4. Central Bank and Governments Cooperate 205
Conclusion 212
1. The Monetary Union as a Whole 212
2. The Monetary Union of Two Countries 2.1. Monetary Policy in Europe 215
2.2. Fiscal Policies in Germany and France 218
2.3. Central Bank and Governments Decide Sequentially 219
2.4. Central Bank and Governments Cooperate 224
2.5. Central Bank and Governments Differ in Loss Function 228
Result 232
1. Monetary Policy in Europe 232
2. Fiscal Policies in Germany and France 233
3. Central Bank and Governments Decide Sequentially 234
4. Central Bank and Governments Cooperate 236
The Current Research Project 240
References 244