Download or read book Macroeconomic Analysis of Monetary Unions written by Oscar Bajo-Rubio and published by Springer Science & Business Media. This book was released on 2011-05-06 with total page 53 pages. Available in PDF, EPUB and Kindle. Book excerpt: The book develops a general framework for the macroeconomic modeling of monetary unions. The starting point of the analysis is the standard two-country Mundell-Fleming model with perfect capital mobility, extended to incorporate the supply side in a context of rigid real wages, and modified so that the money market is common for two countries forming a monetary union. The model is presented in two versions: for a small and a large monetary union, respectively. After solving each model, the authors derive multipliers for monetary, expenditure, supply, and external shocks, both in the short and the long run; a graphical analysis is also provided. Special attention is paid to the crucial distinction between symmetric and asymmetric shocks.