Monetary Policy Interactions Between the U.S. and the EMU

摘要: This paper examines the monetary policy relationship between United States and European Monetary Union (EMU) using a large open economy model that incorporates interactions makers in two "countries". The builds on extends previous research, by Ball, Svensson, McCallum Nelson Rotemberg & Woodford, among others, focused performance of simple rules closed economies or small economies. Parameters are matched to data taken from U.S. EMU's 11 member countries. These parameters then used calculate optimal reaction coefficients econmy under both cooperative non setting. results show that, most rules, EMU has worse macroeconomic performance. Despite overall performance, can gain include external variables, as well through cooperation. also confirms fundamental sources lie higher inflation persistence, greater volatility shocks openness Since all three these likely witness substantial change following adoption single currency creation Central Bank, point more symmetric future.