The Design of EMU
Electronic Access:
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Summary:
Pursuit of price stability may, but need not, exacerbate output fluctuations. This paper discusses the monetary strategy of the European Central Bank, the intermediate targets that this should entail, and implications for accountability, transparency, and reputation. Country-specific shocks will remain but output correlation may not reflect the old pattern of core and peripheral countries. The Stability Pact will force some countries to switch off their automatic stabilizers; others, with fewer fiscal problems, can retain them. Output correlations in EMU may reflect a fiscal core and fiscal periphery. Additional labor market flexibility remains the best solution.
Series:
Working Paper No. 1997/099
Subject:
Banking Exchange rates Fiscal policy Foreign exchange Inflation Inflation targeting Monetary policy Price stabilization Prices
English
Publication Date:
August 1, 1997
ISBN/ISSN:
9781451852233/1018-5941
Stock No:
WPIEA0991997
Pages:
36
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